While everyone agrees that a large college debt hinders a young person from leading a productive, happy life, the truth is that Senator Elizabeth Warren’s plan to just forgive massive amounts of college debt is almost as bad as the college debt problem in itself.
To make matters worse, the presidential hopeful’s plan won’t benefit the poor and lower-middle class as much as it will help rich and upper-middle class students. Recent statistics from the National Student Clearinghouse Research Center show that just over half of all students from low income high schools enroll in college upon graduating from high school. On the other hand, 69% of students from higher income high schools enroll in college upon graduating, and this number rises to 76% for students from low poverty high schools.
It is also worth noting that wealthy students are more likely to take graduate courses than their financially challenged counterparts, and the higher education naturally comes with a higher price tag. In fact, graduate students held an astonishing 40% of all the student loan debt five years ago, even though they only made up 14% of the population in higher education. Many students who complete a university degree in a useful field (i.e. those who study medicine, a STEM degree or earn an MBA) go on to earn millions of dollars over the course of their careers. Such students should have no problem paying back all their student loans if they made at least semi-responsible borrowing decisions and have managed their money wisely upon graduation.
The Warren campaign has made it clear that repayment for college debt would not be equal for everyone; those who have a low income would receive more money than those with a high net worth. However, even students who come from rich families don’t have a high net worth upon graduation as they often start at entry-level jobs that only pay a middle-class salary at first.
This plan would offer up to $50,000 for students earning less than $100,000 a year, and many upper middle class and even rich students would fall under this category. Naturally, students from poor or lower middle class backgrounds would be eligible for this amount of student loan forgiveness as well. However, there are relatively few poor and lower-middle class students who study at college in comparison to the many middle class, upper middle class and rich students who take college courses in one or more fields.
The idea of paying off college debt in order to help young people start off life on the right foot is a noble one, or at least sounds like a noble one at first. The problem is, when such a plan is carefully scrutinized, it becomes clear that it constitutes a money transfer to rich people who would, in many cases, be able to pay off student loans even without assistance from the Federal government.
This unnecessary transfer of cash to the rich is just one problem arising from Warren’s plan. Obtaining the money needed for such a program would also be problematic, as it is doubtful that Sen. Warren’s proposed wealth tax would actually generate all the cash needed to forgive student loan debts for young people across the United States.
Unfortunately, Sen. Warren and her team don’t seem to be thinking about how their plans and ideas would work in the real world. As the senator lags behind many of the other Democratic candidates running for the presidency, she seems desperate to come up with half-baked ideas for solving large problems in the hopes that at least one of her ideas will stick and boost her approval ratings in the polls.
The idea of using the federal government to confiscate wealth from the rich and distribute it to other rich people is just one of the senator’s poorly conceived ideas that will hopefully die with her campaign.
~ Liberty Planet
