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Bernie's Student Debt Plan Creates a Million More Jobs Than Warren's-She Should Embrace It

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That distinction has been obscured in what has been, at least so far, a muddled debate.

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Headlines like Vice's "Elizabeth Warren Is Taking Her Plan to Cancel 75% of Student Debt to Congress" have added to public confusion over the two candidates' plans. Warren's $640 billion proposal would, in fact, cancel only 40 percent of all outstanding student debt. The confusion has also been compounded, no doubt unintentionally, by Sen. Warren's remark during her second presidential debate that her plan would "cancel student debt for 95 percent of the people who have it."

That statement, while true, could leave some listeners with the wrong impression. Warren's plan would cancel at least some student debt for 95 percent of debt holders, and all debt for 75 percent of borrowers (the source of Vice's erroneous headline). But some borrowers owe more than others, which is why the Warren plan leaves roughly $1 trillion in student debt in place. Twenty-five percent of borrowers, more than 10 million people, would still have student debt under Warren's plan.

Warren's plan, unlike Sanders', caps the amount to be canceled at $50,000 per person. That figure is progressively reduced for income above $100,000 per year per household until it reaches $250,000, at which point no cancellation is offered. But households making $100,000 year aren't necessarily prosperous. While they are not impoverished, a working couple-say, a bus driver and schoolteacher making $51,000 each-aren't especially well-off by most standards, especially if they're raising children. If one or more children with student debt lives and works at home, their added income would further reduce the debt relief to a family that may well be struggling.

The desire to limit debt reductions for these households may have some tactical vote-seeking value, especially in a political culture that has directed intra-middle-class resentment toward better-off workers rather than the wealthy. That doesn't make it the best policy for working people of any age, race, or income level. In fact, because of its limits, Warren's plan would have a significantly smaller stimulus effect and would therefore help all workers somewhat less.

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Richard (RJ) Eskow is a former executive with experience in health care, benefits, and risk management, finance, and information technology. Richard worked for AIG and other insurance, risk management, and financial organizations. He was also a (more...)
 
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