Warren unveils plan to cancel student loan debt “on day one” of presidency

Warren unveils plan to cancel student loan debt “on day one” of presidency

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Democratic presidential candidate Sen. Elizabeth Warren on Tuesday said that if elected president she would immediately take action on one of her signature campaign promises – to cancel the student loan debt of tens of millions of Americans.

Warren's announcement of her plan comes just weeks ahead of the Iowa and New Hampshire Democratic caucuses. Warren said she would use legal tools and "existing laws on day one of my presidency" to implement her plan to relieve approximately 42 million students of debt.

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Rep. James Clyburn (D-SC) introduced a bill that would cancel up to $50,000 in student loan debt for those with incomes of less than $100,000 a year. In her plan, Warren wrote that the Department of Education "already has broad legal authority to cancel student debt, and we can’t afford to wait for Congress to act."

"So I will start to use existing laws on day one of my presidency to implement my student loan debt cancellation plan that offers relief to 42 million Americans -- in addition to using all available tools to address racial disparities in higher education, crack down on for-profit institutions, and eliminate predatory lending," she wrote.

Warren's announcement also comes amid a drop in support in Iowa and New Hampshire in recent weeks, falling behind both Sen. Bernie Sanders and former Vice President Joe Biden in both states and behind Pete Buttigieg in Iowa.

Millions of Americans own an estimated total of over $1.6 trillion in student debt, and the issue is particularly serious in Iowa and New Hampshire, where according to The Institute for College Access & Success, 60% and 76% of new graduates, respectively, have outstanding student debt.

Warren's plan is similar to that of Sanders', which takes it a step further and aims to entirely cancel the country's student loan debt by imposing taxes on Wall Street transactions.

Along with her plan, Warren also shared a letter by three Harvard Law School experts, who said Warren's plan to use executive action to cancel the dent was  “lawful and permissible,” according to CNBC.

The experts cited a provision of a 1965 education bill that gives the U.S. Secretary of Education “authority to modify a loan to zero.”

But student loans expert Mark Kantrowitz argued that the education secretary can only cancel debt "in limited circumstances."

“The U.S. Department of Education does not have the discretionary authority to cancel student loan debt except in limited circumstances specified by the statute, such as death, disability or closed schools,” Kantrowitz said. “Likewise, the authority to compromise debt is limited to situations in which the borrower demonstrates severe financial distress.”

Wayne Johnson, former chief operating officer of the Office of Federal Student Aid, also raised concerns about Warren's plan, asking whether “everyone who takes out new loans going to think, ‘I don’t have to do anything, they’re just going to be forgiven anyway?’”

(Photo credit: Gage Skidmore)

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