Last week, presidential candidate Elizabeth Warren unveiled a sweeping plan to tackle a $1.5 trillion student debt crisis to address our higher education system that is holding back generations of Americans. Her proposal calls for wiping out student debt of up to $50,000 for 42 million working and middle class Americans. Moreover, 90 percent of those who are burdened with student debt but dropped out of college would also benefit. The proposal makes all public colleges’ tuition and fees free, adds $100 billion in Pell grants over ten years, and creates a $50 billion fund for HBCUs (historically black colleges) and other minority-serving institutions. Senator Warren plans to pay for it with an annual 2 percent tax on families with $50 million or more in wealth.
Warren’s plan is sparking a debate about the scale of federal support needed to address the student loan crisis and surfacing narratives about fairness and deservedness. It also provides us the opportunity to examine how corporate power and anti-Black racism is depriving an entire generation of young people from getting ahead, whether that’s buying a home, saving for retirement, starting a family, or launching a business. Student debt ultimately serves as a multigenerational debt anchor that causes unrelenting stress, financial strain, and a spiraling cycle of debt.
Who carries debt and who defaults on their loans is racialized and gendered. About 11.5 percent of student loans are in default. According to the New York Federal Reserve, borrowers between the ages of 40 to 49 have the worst delinquency rates. It is estimated that in the next five years, 40 percent of borrowers are likely to default.
Last month we released a report about millennial women — defined as those born between 1980 and 1997— showing that two-thirds of student debt ($900 billion) is owed by women. And roughly $700 billion of outstanding loan balances are held by Americans under 40.
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