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Elizabeth Warren Takes the Lead On Student Debt

Elizabeth Warren’s proposal to cancel student debt isn’t perfect, but it’s the boldest so far. Bernie Sanders should take notice.

Elizabeth Warrens speaks at the Heartland Forum in Storm Lake, Iowa. Lorie Shaull / Flickr.

Elizabeth Warren’s campaign for the Democratic presidential nomination may be lagging in the polls, but she might have hit on a new strategy to change that. In the past few weeks she’s been releasing ambitious and detailed policy proposals. Leaning on her much-admired technical proficiency, she’s moving at a quick clip, and her opponents are struggling to keep up.

The most recent of these is her plan to dramatically reduce the student debt load. The proposal has the potential to capture the imagination and win the support of the more than forty million Americans currently burdened by student loans.

Bernie Sanders has also expressed support for student debt cancellation on the campaign trail, authoring plans for tuition-free college that Warren incorporates into her proposal. The cost of higher education promised to be his issue — with this plan, it may emerge as hers.

Sanders’ best bet for reclaiming the territory Warren has staked out is to release one of his own — and it ought to be bolder and more universal than Warren’s, canceling all student loans in one fell swoop. No means-testing, no eligibility requirements, no exceptions.

Warren’s plan is a game-changer: it takes the problem seriously and proposes to do something concrete about it. It’s a huge step up from Obama’s lackluster “Pay As You Earn” scheme, which aimed to keep student loans at 10 percent of a person’s income and forgive them after twenty years if certain requirements were met — a gentler, more manageable form of debt peonage.

Unlike Obama’s, Warren’s plan goes beyond “refinancing” into the realm of immediate — which isn’t to say wholesale — cancellation. In the spirit of redistribution, she proposes to fund this plan with a wealth tax. There’s no question: this plan is a declaration of war on both student loan profiteers and an economic system that benefits from the eminently exploitable labor of educated but desperate workers scrambling to pay off their loans.

But Warren’s plan has some shortcomings, too. For one thing, it’s means-tested through the roof. For another, it only cancels $640 billion of the nearly $1.5 trillion student loan debt. Both of these are problems.

Means-tested programs are uniquely vulnerable to attack. Capitalists and their political allies see specific thresholds as opportunities for negotiation, and because of their structural position in the economy they are powerful negotiators with plenty of tricks up their sleeve. The history of means-testing has proven that the fight over thresholds — that is, over how to divvy up benefits when they’re not universal — ties reformers’ hands, resulting in watered-down policy and, often enough, eventual reversal.

Second, by not eliminating all student debt at once, the plan fails to fully cast education as a social right and student debt as essentially illegitimate. Again, this leaves the plan politically vulnerable, because if some student debt is legitimate, then conservative interests will endeavor to broaden that category — pitting ordinary people against each other, provoking us to fight it out among ourselves. If we give them this terrain to fight on, they’re strong enough to win. Universal design eliminates this problem putting us in a position of strength, for which excusing a few rich people’s loans is a small price to pay.

Warren’s proposal transcends mere refinancing, and would be a huge windfall to the majority of student debtors. But because Bernie Sanders’ political success so far has been predicated on his advocacy of trailblazing universal policy proposals like Medicare for All and tuition-free college, he’s uniquely well positioned now to propose an ambitious alternative. People expect audacity from him.

The ultimate student debt relief plan is a full-on jubilee. A progressive presidential administration could cancel all student debt immediately. The Department of Education has the power to forgive loans for which it is the creditor. It can also take over loans owed to private lenders, cancelling those too and reducing the student debt burden from $1.5 trillion to zero. In the short term it can be paid for with a wealth tax and by reshuffling priorities — for example, by ending foreign wars and cutting the military budget. As for the long term, a recent study by economists found that a one-time debt cancellation event would add between $861 billion and $1,083 billion to GDP over ten years.

In the process, millions will be liberated from the debt burden that impedes their ability to make choices about where to live, what career to pursue, and when to start a family. There will no doubt be vicious pushback against a debt jubilee, but the measure itself has a loyal mass political constituency in the making. Undivided by means-testing, that constituency will be on solid footing to offer popular opposition to anyone trying to drag the nation back into the Dark Ages of student debt.

There is no good reason why a candidate can’t propose to simply make college tuition-free and eliminate all student debt simultaneously, ending the failed experiment of education as a commodity once and for all and leaving no wiggle room for capitalists to maneuver in. With her new proposal, Warren has advanced the student debt conversation, and perhaps her own campaign prospects. Sanders has a chance to respond, but only if he leans into the trait that made him popular to begin with: his radicalism.