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President Biden's plan to cancel some student debt for millions of Americans is drawing praise but also criticism. Some say it goes too far while others say it doesn't do enough to address the high cost of college. Sen. Elizabeth Warren joined Amna Nawaz to explain why she believes it's a move in the right direction, but more could be done.
President Biden's plan to cancel some student debt for millions of Americans is drawing praise, but also criticism. Some say it goes too far, while others say it doesn't do enough to address the high cost of college.
Senator Elizabeth Warren, a Democrat from Massachusetts, has long advocated for even larger relief. She spoke with the president's top advisers before the final announcement. And she joins me now.
Senator Warren, welcome back to the "NewsHour." Always good to have you here.
You have hailed this move as one of the biggest acts of consumer debt relief in American history. But, as we pointed out, you have also long fought for more, more relief. And my colleague Laura Barron-Lopez had reported you were among those who was making the pitch to the president in those final hours to get him to go beyond that $10,000 he was comfortable with.
So, tell us, what was your final pitch to the president on this?
Sen. Elizabeth Warren (D-MA):
So it was about concentrating the relief to those who need it most.
And, actually, that's where the president ended up. Remember, a lot of people talk about this as $10,000 of cancellation. The majority of people who will have their loan debt canceled will get $20,000 of cancellation. And that's because the president said, $10,000 is the base, but another $10,000 for anyone who had a Pell Grant when they were in college.
And remember who that is; 95 percent of the folks who have Pell Grants had family incomes under $60,000.
I wanted more, and I will still fight for more. I think there's more good that we could do. But there's concentration where it is needed the most. And that means that, this morning, 20 million Americans woke up without student loan debt for the first time in their adult lives. And another 23 million Americans woke up knowing that their student loan debt burden is going to be smaller than it was.
So I think that's good.
Let me ask you about that burden, then.
I'm going to walk through the math. Tell me if I have got something wrong here. But you know as well as I do the disparities, the racial disparities on this, right? Black borrowers, in particular, carry higher debts than their white counterparts.
According to numbers I have seen from the NAACP, Black borrowers, on average, have about $53,000 in student debt four years out of school. So, $20,000 in loan forgiveness, that cuts the debt down to $33,000. That's not an insignificant amount of debt to still carry.
Sen. Elizabeth Warren:
Yes. Yes. Yes.
Oh, look, the — I pushed for a higher number, in no small part for exactly that reason, in order to maximize how much we could close the racial wealth gap. But make no mistake, $20,000 of debt forgiveness, particularly when it's concentrated among Pell recipients, helps get us in the right direction on closing the racial wealth gap.
Think of it this way. Half of all, Latinos, for example, right now who have student loan debt will see their debt entirely wiped down. I — about half of all African Americans will see their debt wiped out. That's huge.
If I may, let me put to you some of the criticism that we have already seen in the last day, certainly coming from Republicans, but also from your fellow Democrats, right?
You have seen Representative Tim Ryan, for example, who's in a tight Senate race in Ohio. Here's what he said. He said: "Waving debt for those already on a trajectory to financial security sends the wrong message to the millions of Ohioans without a degree working just as hard to make ends meet."
So, Senator, it's true some, like, 60 percent of Americans over the age of 25 don't have a college degree. Talk to those people, the millions of Americans who say this is unfair, they don't want their tax dollars used to carry out what they see as a bailout for many others.
Well, yes, let's talk about fairness, but let's, as I said, start with the fact that many of the people we're talking about here do not have college degrees, and they are not on a trajectory to have great wealth.
Most of the benefits of this program are going to go to people who have an income under $75,000. This is part of the reason that the unions fought so hard for working people to be able to get these benefits. But we should talk about fairness.
Here's the fairness I think about. When I was growing up, my daddy ended up as a janitor. I wanted to be a public school teacher. I found a public university that was really terrific that cost $50 a semester. So, on a price I could pay for on a part-time waitressing job, I was able to go to college, finish my diploma and become a public school teacher.
That opportunity is just not out there today.
What about that cost of college? We have seen tuition soar over the last two decades.
There are concerns that this move could actually drive people to believe there will be debt relief, and that colleges could now actually raise tuition, students would end up borrowing more, the student debt crisis gets worse. Is that a risk?
We really need to address the cost and the rising cost of college. And there are a lot of different ways we can do that. For example, the Democrats in the last stimulus package put a lot of money into the historically Black colleges and universities to be able to help support those schools, so they could bring down their tuition.
I have been working very hard on a piece of legislation that requires more transparency, so the schools actually have to reveal the true cost of going, how many graduate, how long it takes people to graduate, and how much money they make on the other side. There are a lot of schools that are resisting…
And, Senator, if I may, the question is more about the concern that this move could actually make that student debt crisis worse? Do you share that concern?
Well, I don't see it that way.
What I see is that we have a problem with the cost of higher ed. And it has gone up too fast. And it is the responsibility of Congress and the Department of Education to step in.
Part of what has happened is, the states have cut back on support for their public institutions. And that means families have to pay. So, when you see the sticker price going up, it may not be because the college is trying to spend more money to provide that education, but because the state has taken away money.
Senator, top on voters' minds is this issue of inflation, and there are also concerns even from centrist Democratic policy groups that this could actually be inflationary, it could undermine some of the work that's been done.
If that is the case, was this one-time cancellation worth it?
So, first of all, there's no data to back this up.
The latest evidence, including something out today from — I think it was from Goldman Sachs, said the effect will be negligible doing the cancellation, in part…
Well, the Committee for a Responsible Budget…
… has said that they think this could undermine some of the gains made from the recently passed Inflation Reduction Act.
They said a very tiny percent.
But what they're ignoring is the smart thing that the president has done. He has coupled debt cancellation with restarting repayments for the 23 million Americans who will owe student loan debt. That means that, for those people, on average, paying about $400 a month in student loan debt payments, pulls that money out of the economy.
That is not inflationary. That's actually a way to fight inflation. It's deflationary. And so, when the two are put together, I think the effect we're going to see is that this move helps us fight inflation and helps us bring down costs overall for families.
I think it's fair to say this is an issue we're going to be hearing a lot about in the weeks and the months ahead.
Elizabeth Warren, Democratic senator from Massachusetts, thank you so much for joining us. Good to have you.
Thank you for having me.
And, tomorrow, we will be speaking with Republican Senator Thune of South Dakota about why he opposes the president's plan to cancel some student debt.
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