Elizabeth Warren on Student Loans in 2019

Elizabeth Warren on Student Loan Forgiveness

Elizabeth Warren has served as the senior United States Senator from Massachusetts since 2013.  Warren has yet to release any official campaign platforms regarding student loans, but she has done and said things in the past that offer insight into her thoughts on the topic. We’re going to break down Elizabeth Warrens position on student loans and student loan forgiveness below.

Elizabeth Warren Student Loan Legislation & Actions

College Transparency Act

Warren feels strongly that students need all the facts before deciding where to attend college and borrowing money to attend that college. In March of 2019, Senator Warren introduced the College Transparency Act to make that information accessible to all students. The act would require colleges to accurately report on specific student outcomes like enrollment, degree completion, and post-college success broken down by major.

Colleges would report the data and the National Center for Education Statistics would store the information, generate post-college outcome reports, and create a user-friendly website where families could access the information. Students can use this concrete data to make smart financial decisions about where to attend college. After all, college choice directly affects the amount of money you need to borrow to attend college.

Protecting Job Opportunities for Borrowers

Senators Warren and Rubio reintroduced the Protecting Job Opportunities for Borrowers Act in February 2019. This act would prohibit states from suspending, revoking, or denying professional, teaching or driver’s licenses just because a borrower entered default or fell behind on their student loan payments. In reference to the act, Warren is quoted saying that “we shouldn’t punish people struggling to pay back their student loans by…preventing them from going to work and making a living.”

Warren and Rubio hope that the bill will keep workers employed so that they can continue to pay off their loans rather than leave them unemployed and without means to get out of default.

Debt-Free College Act

Senator Warren worked alongside other senators to reintroduce the Debt-Free College Act in March 2019. The goal of the bill is to make debt-free college a reality within five years. For every dollar a state spends to help students pay the total cost of attendance (tuition, room, board, books, supplies, etc.) without having to take on debt, the federal government will award that state a dollar in grant money.

Bank on Students Emergency Loan Refinancing Act

In March 2019, Senator Warren sponsored and introduced the Bank on Students Emergency Loan Refinancing Act, a bill to amend the Higher Education Act of 1965. The act would allow borrowers to refinance public or private undergraduate student loans at a 3.76% annual interest rate. This is the same rate offered during the 2016-2017 academic year. The refinance rate for graduate school loans and parent loans would be 5.41% and 6.41% respectively. It’s estimated that this bill would save borrowers an average of $2,000 over the life of their loan.

College for All Act of 2017

Along with Bernie Sanders and other senators, Senator Warren introduced the College for All Act of 2017. This plan is primarily associated with Senator Sanders, but Ms. Warren is a notable contributor. You can read our full coverage of Sanders’ College for All Act here.

Here are the main tenants of the plan that relate to student loans and ways to reduce student borrowing:

  • Eliminate tuition and fees at public four-year colleges and universities for households making $125,000 or less annually
  • Make community college tuition-free for everyone
  • Restore the old method for calculating federal student loan interest rates, which would reduce student loan interest rates by about 50% and lower federal profit margins
  • Let borrowers refinance their federal student loans at the interest rates being offered to new borrowers rather than at their loans’ weighted average interest rate rounded up to the nearest eighth of a percent
  • Ensure that low-income students who receive Pell Grants can continue to use the money to cover non-tuition expenses like room, board, books, transportation, and supplies
  • States and tribes must provide their poorest students with full rides, which includes tuition along with room and board
  • Create a dollar-for-dollar match program where for every dollar the state spends on additional projects that help reduce higher education costs, the federal government will award a dollar
  • Expand and triple the investment in work-study programs so that 2.1 million students—rather than just 700,000 students—can participate
  • Reduce the cost of tuition for low-income students attending private nonprofit Historically Black Colleges and Universities (HBCUs) and Minority Serving Institutions (MSIs)

Student Loan Servicer Performance Accountability Act

In 2017, the Department of Education wanted to have a single loan servicer for the country’s trillion-dollar student loan portfolio. Senator Warren introduced a bill to stop that action and promote competition amongst student loan servicers. Why does it matter? Warren feels that promoting competition gives the servicers more incentive to improve their services for student borrowers and adds accountability. If one company services all the loans, Warren believes that it would lower the quality of assistance for borrowers who have questions and need help managing their debt. This bipartisan bill passed.

Limit Interest Rates for Certain Federal Student Loans

In 2013, Senator Warren co-sponsored a bill that would have placed interest rate limits on certain federal student loans. More specifically, it would limit interest rates for undergraduate Federal Direct Loans to 6.8%, for graduate Federal Direct Loans to 6.8%, and for Federal Direct PLUS loans to 7.9%.

Ultimately, this amendment was rejected, and an amendment with higher interest rate limits was accepted. Still, it illustrates her commitment to reducing the profits earned by the federal government from the student loan program.

Elizabeth Warren Student Loan Statements & Positions

Borrowers of Color Face a Disproportionate Student Debt Burden

Borrowers of color face a disproportionate student debt burden and Warren wants the federal government to act. In January 2019, she and some colleagues sent out letters soliciting feedback from relevant experts asking for suggestions on ways to improve federal policy and to make higher education more equitable. Warren is committed to doing better for and reducing the student debt burden for these students.

Oversight of the Department of Education Student Loan Program

Since the start of her senatorial career, Senator Warren has felt that effective oversight of the U.S. Department of Education student loan program is of high importance. She wants the Department held accountable for their actions, specifically those affecting college students and student loan borrowers. As part of this, she released a report in February 2018 entitled, “DeVos Watch, Year One: Failing America’s Students.” In it, she expresses her thoughts about how the Department is being run.

Elizabeth Warren Student Loan Forgiveness

Sponsored Legislation & Actions

Tax-Free Discharged Student Loans

In 2015, Warren helped ensure that students receiving a discharged Corinthian College loan would not have to pay taxes on that money. She and her colleagues wrote a letter to the Treasury Secretary, arguing that the discharged loans should be treated as a non-taxable event. In other words, borrowers shouldn’t have to report the discharged loans as income and shouldn’t have to pay a burdensome tax bill on the discharged loan amount.

This action saved those borrowers estimated thousands of dollars in taxes.

Statements & Positions

ITT Tech Discharge

Warren signed a letter in 2018 asking Secretary Betsy Devos to provide full student loan discharges to former ITT Tech students due to the company’s history of misconduct and misleading students. Warren believes that the thousands of students who were affected by the company’s bankruptcy and who filed a borrower defense claim should have their student loans forgiven.

Funding for Student Debt Relief

On her official campaign website, Senator Warren states her intention to institute an Ultra-Millionaire Tax on some of America’s richest families in order to help rebuild the middle class. The money brought in would be used for initiatives like universal childcare, Medicare for All, and student loan debt relief. Specifics beyond that are unavailable at this time, but it does indicate that there will be some sort of Elizabeth Warren student loan forgiveness or student loan debt relief platform.

Public Service Loan Forgiveness Support

In 2017, Elizabeth Warren co-wrote an op-ed for the New York Times with Bernie Sanders. In it, she expresses her support of the Public Service Loan Forgiveness program. Senator Warren also called for Congress to increase funding for the program and to fix the failures in student loan servicing that make it difficult for eligible borrowers to receive their loan forgiveness.

In October 2018, Warren also signed a letter written to Betsy DeVos calling for an overhaul of the Public Service Loan Forgiveness program to ensure that all qualified applicants have their loans forgiven. The letter also asks for the Department to make the application process simpler and more organized. The letter was sent after the first round of borrowers applied for the PSLF program but only 96 out of approximately 28,000 were awarded loan forgiveness.

Borrower Defense Rule

Borrowers defrauded by colleges are eligible for student loan discharge, which wipes away all eligible federal student debt. In 2016, the borrower defense rule was updated to give those borrowers more relief options. To have their loans discharged, borrowers need to file a claim. As of December 2018, more than 139,000 claims are pending, meaning borrowers are still waiting to hear back about approval.

In February 2019, Elizabeth Warren and 16 other federal legislators co-wrote a letter to Secretary of Education Betsy DeVos regarding their concerns over the backlog of discharge requests. Warren feels strongly that the borrowers with pending claims should receive prompt communication about the status of their claims. She also strongly feels that the borrower defense rule needs to be upheld.

Summary of Elizabeth Warren on Student Loans

In a nutshell, here are main views of Elizabeth Warren on student loans and student loan forgiveness based on her public statements and sponsored legislation:

  • Community college should be free for all students
  • Federal and state governments need to work together to reduce college costs and minimize student borrowing
  • The government should not be profiting from student loans
  • Eligible borrowers should receive their student loan discharge or forgiveness promptly
  • The federal government needs policies to make higher education more equitable

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