Elizabeth Warren has the biggest free college plan yet

Elizabeth Warren wants to wipe away student loan debt for the vast majority of Americans who have it, and make debt-free college a reality for new students.

In a new plan detailed on Monday, Warren became the first Democrat running for president in 2020 to detail a sweeping higher education plan with the goal of alleviating America’s $1.5 trillion student debt crisis.

Warren’s plan is unique in that is would assist former and future college students alike. The plan would cancel up to $50,000 in student loan debt for an estimated 42 million Americans, and invest in debt-free college for students attending two- or four-year public institutions. It also comes with a hefty price tag of $1.25 trillion over 10 years. Warren plans to pay for it with the ultra-millionaire tax she introduced in January, which would tax the 75,000 wealthiest families in America.

The senator for Massachusetts has long been an advocate for forgiving student loan debt, but in the Medium post in which she announced the plan, Warren said college affordability is personal to her. Warren wrote about attending public college for $50 a semester, something that would be unimaginable today.

“Higher education opened a million doors for me,” Warren said. “It’s how the daughter of a janitor in a small town in Oklahoma got to become a teacher, a law school professor, a US Senator, and eventually, a candidate for President of the United States.”

She believes student debt — and the fear of accumulating it — is holding back millions of other Americans from achieving the same potential.

What Warren’s new higher education plan would do

Warren’s plan is unique for its scope. When Bernie Sanders and Hillary Clinton competed for the Democratic nomination in 2016, their higher education debate largely centered on whether college tuition at public universities should be heavily reduced — or free.

Since then, the Democratic debate has shifted to whether just covering tuition goes far enough. Sen. Brian Schatz (D-HI) and Rep. Mark Pocan (D-WI), reintroduced an ambitious debt-free college plan this year, which would not only cover the costs of tuition, but also help students pay for extra costs like housing and food. But that plan doesn’t touch the more than $1.5 trillion in existing student debt in America. And surprisingly, students with less than $5,000 in debt are often some of the worst off, as they are more prone to defaulting on their loans.

Warren’s plan goes much further than anything debated before; along with the substantial debt forgiveness plan, she intends to find a way to pay not just for tuition, but other costs like housing, transportation, and books.

Here’s what the sweeping plan would do:

  • Cancel $50,000 in student loan debt for every person with household income under $100,000, and give “substantial debt cancellation” to every person with household income between $100,000 and $250,000. (Those making above $250,000 wouldn’t qualify.)

Most Americans would have their debt canceled automatically, based on federal data on their income and outstanding debt. However, Warren’s plan would also target debt relief for those least likely to be able to repay their loans. Out of the almost 45 million Americans with student debt, Warren’s policy team estimates this plan would give debt relief to over 95 percent, and entirely forgive student loan debt for over 75 percent.

  • Make public two- and four-year institutions tuition-free and expand Pell Grant funding to go toward additional college costs like housing, transportation, food, and books.
  • Cut off for-profit colleges from receiving any federal funds (including federal student loans or military benefits). These schools tend to account for a huge number of defaults on their loan payments. A majority of students who attend for-profit colleges default within three to five years after they begin repaying what they owe.
  • Create a $50 billion fund for historically black colleges and universities and minority-serving institutions, and add more money to it over time.

Warren intends to pay for this plan, which her team estimates would cost $1.25 trillion over 10 years, this way:

  • Take money from Warren’s proposed tax on America’s ultra-millionaires and billionaires, which includes the 75,000 wealthiest families in the country (those making over $50 million).
  • Warren’s tax plan would put an annual 2 percent tax on wealth above $50 million and an additional 1 percent tax on wealth above $1 billion.
  • Warren estimates this tax would raise $2.75 trillion in revenue over 10 years, meaning her debt-forgiveness and universal education plan would cost less than half of the total revenue raised.

Warren’s plan compared to others

Although it is one of the first higher education plans to be released during the 2020 cycle, Warren technically isn’t the first to come forward with progressive higher education policy. In 2016, Sen. Bernie Sanders (I-VT) spearheaded a national conversation around tuition-free public college in his presidential bid, and Hillary Clinton eventually adopted much of Sanders’s proposal when she won the Democratic nomination. Sanders is running again in 2020, but hasn’t yet detailed an updated plan.

The Schatz and Rep. Mark Pocan (D-WI) Debt Free College Act would give participating states a dollar-for-dollar match from the federal government for however much funding they appropriate for state schools. In exchange, those schools would have to commit to helping students pay for the full cost of college without taking on debt, through need-based grants to help students who can’t afford it cover costs.

Sanders’s College for All Act would eliminate undergraduate tuition at four-year institutions by providing $47 billion per year to states who committed to increasing their own higher education funding with 2-1 matching federal funds. Sanders proposed tuition-free college and encouraged student loan refinancing. His plan was meant to be paid for by imposing a Wall Street speculation fee on investment houses and hedge funds.

Hillary Clinton eventually expanded her plan to encompass tuition-free college when she became the Democratic nominee for president, calling for tuition at public universities to be free for American families that made less than $125,000 per year.

Like with Sanders’s and Schatz’s plans, Warren’s vision calls for the federal government to partner with states that want to invest more in their public universities and match that state investment. While other plans have been dollar-for-dollar, or a 2-to-1 federal match, Warren wants the federal government to kick in two-thirds of the funding, making it a deal states would be hard-pressed to turn down.

Of course, all these plans have a catch; if states don’t want to take the money, their universities are left out of the equation. Warren is hoping to incentivize more states to join by upping the federal funding. But as the Affordable Care Act implementation showed, some states will refuse to take generous federal subsidies, even if they would benefit residents.

As Vox’s Libby Nelson has written, free college proposals often get criticized for not offering enough relief to the poor and being too generous toward wealthier people who can afford to go to college in the first place. Nelson wrote:

The first criticism revolves around the fact that sometimes tuition isn’t the highest cost of college. At community colleges, the hidden costs of attending college while working less than full-time — books, food, rent, child care — are much more expensive than the actual tuition. At public universities, room and board can cost almost as much as tuition.

This is why, although many proponents of free college are worried about student debt, simply lowering tuition to zero wouldn’t be enough to get rid of it. In Sweden, where tuition is free, students still accumulate about $19,000 in student debt during their time in college in order to pay living expenses.

Warren and Schatz both took pains in their plans to make sure they’re targeting the most debt relief toward low-income students; Warren’s plan invests specifically in minority institutions and puts a high priority on lowering the cost of college for minorities.

Warren may face criticism from more moderate 2020 candidates about the cost of her plan. But by putting out yet another detailed policy before her fellow Democratic candidates, Warren is throwing the gauntlet down on free — and debt-free — college in a bold way.