Warren's Plan to Abolish Student Debt Came From Grassroots Pressure

Warren’s Plan to Abolish Student Debt Came From Grassroots Pressure

The new public higher education proposal that Sen. Elizabeth Warren released this week lifts up demands that grassroots activists have been making for years. Her plan makes public college tuition-free, cancels student loan debt for 95 percent of Americans, invests at least $50 billion in historically black colleges and universities (HBCUs), and stops federal loan money from flowing to for-profit colleges — all paid for by a tax on the ultra-wealthy.

In short, Warren’s proposal seeks to reverse many of the harms wreaked on students in the aftermath of Reaganism, which deployed neoliberal reforms, anti-welfare rhetoric, and aggressive policing to crush activism on campuses, and which paved the way for decimating public investment in higher education.

Warren is not the first presidential candidate to push for such reforms: Since his 2016 campaign, Senator Bernie Sanders has also been calling to make both four- and two-year public universities and college completely tuition free. And while centrist Democratic candidates like Senator Amy Klobouchar say that free college would require a “magic genie,” the United States has had robust, free college before. New York had extensive free college programs until the mid-1970s, as did California. But when Ronald Reagan became Governor of California, he turned the University of California (UC) system into a political boogeyman, sent in the National Guard to quash student protests, and began an ideological assault on higher education as a public good. Governor Reagan proposed creating a tuition for the UC system, which had been free since 1868, arguing that students “might think twice” about “[carrying] a picket sign” if they had to pay tuition.

And pay they have. While Warren paid $50 a semester in tuition for her own public college education in 1983, the average college graduate in 2017 had $28,650 in student debt. Approximately 44 million Americans get student loan bills every month, and together their debt exceeds $1.5 trillion. Navigating student loans is as complicated as doing taxes, and even though servicers are paid by the Department of Education to help, their track record is so abysmal that the Consumer Financial Protection Bureau (another Elizabeth Warren brainchild) warned in 2015 about widespread failures. Nonprofits like Student Debt Crisis, which hold online webinars to help students navigate their loans, have more demand than they can meet. Meanwhile, 8 million borrowers are in default on their loans, with another borrower entering default every 28 seconds.

Warren’s plan tackles this crisis, calling for up to $50,000 in student loan debt cancellation for the 95 percent of people in the US who make less than $250,000. Anyone with household income under $100,000 would get $50,000 in debt cancellation. From there, the amount of cancellation is reduced by $1 for every $3 above $100,000 they earn — so, for example, someone earning $190,000 would get $20,000 canceled. Importantly, Warren’s plan would ensure that the cancelled debt is not taxed as income — something that isn’t always guaranteed today.

Warren’s proposal throws a gauntlet down for other 2020 candidates, who could push even further — like for universal debt cancellation, which a Levy Economics Institute report said could boost GDP by as much as $108 billion per year over a 10 year period.

Warren’s focus on debt cancellation shows that grassroots activism that has agitated for loan abolition since Occupy Wall Street has finally burst into the mainstream discourse. One Occupy offshoot, Strike Debt, has long called for student debt cancellation and succeeded in cancelling a substantive amount of student debt itself through a project known as the Rolling Jubilee. Through online fundraising and an in-person “People’s Bailout” variety show, Strike Debt managed to raise $700,000 to buy and abolish over $31 million worth of defaulted debt in the secondary market, including some private student loans. But as organizer Ann Larson put it, the Rolling Jubilee was never a solution to the debt crisis, but “a public education campaign that successfully demonstrated the exploitative nature of debt markets.” Warren is proposing that the government itself simply write off the student loans it holds on its book.

This is not the first time Warren has pressed for student loan cancellation — although it is her broadest call yet. In 2014, the next evolution of Strike Debt, a group called the Debt Collective — which I have organized with in the past — worked with former students of the for-profit Corinthian Colleges, who undertook the nation’s first student debt strike. These former Corinthian students demanded that the Department of Education use its existing legal authority to cancel the debt of scammed students.

Echoing their demands was Senator Warren herself, as well as advocates, state attorneys general, and other lawmakers, including Rep. Maxine Waters and the co-chairs of the Congressional Progressive Caucus. And while far too many former students at for-profits still await debt cancellation years later, the online web application the Debt Collective created to apply for debt discharges led to the cancellation of more than $500 million in federal loans — though over 158,000 claims from former students are still on hold at the Department of Education. And their advocacy also helped secure $500 million more for former students from ITT Tech in the bankruptcy process.

Senator Warren also drew a bright line by calling for an end to federal student loan money flowing to for-profit colleges. For-profit colleges, despite their CEOs reaping millions, are allowed to take up to 90 percent of their revenue from taxpayer-backed federal student loans. (The GI bill money doesn’t count toward the 90 percent limit, which has led to for-profits targeting military veterans for recruitment.) This federal support continued even in the wake of an avalanche of lawsuits against the industry.

Prior to its bankruptcy, the for-profit Corinthian Colleges, Inc., faced charges of false job placement statistics, predatory lending, securities fraud and the unlawful use of military seals in advertisements. The now-shuttered ITT Tech was sued for predatory lending, and faced investigations by 12 state attorneys general. Argosy withheld more than $9 million in aid owed to students before it collapsed. And the American Career Institute misstated job placement rates and employed unauthorized instructors.

Law-breaking aside, the outcomes that for-profit college graduates face are atrocious; the National Bureau of Economic research found that for-profit graduates earn less money after attending than they did before. As Tressie McMillian Cottom, whose book, Lower Ed, profiles the industry, writes that for-profits “target and thrive off of inequality,” something then-California Attorney General Kamala Harris found baked into the recruiting materials for Corinthian, which instructed recruiters to target those feeling “isolated” or “stuck.” With her ban on federal loans to for-profit colleges, Senator Warren is creating accountability for an industry that’s dodged it for decades.

Another explicit focus in the proposal is on addressing historical injustices and racial inequities in higher education. Warren proposes a new fund for HBCUs and minority-serving institutions with a minimum of $50 billion, and the ability to increase that amount as necessary. Additionally, the proposal calls for a prohibition on public colleges considering citizenship status or criminal history in admissions decisions. The ban on funding for-profit college dollars also combats racial inequality in education, as for-profit colleges have explicitly targeted communities of color. As just one example, before its demise, the majority of Corinthian’s students were people of color (62 percent), and Black women made up more than a quarter of all its students (26 percent).

Warren’s proposal has tapped into a deep and enduring movement to address the problems facing America’s student loan borrowers. As the Debt Collective’s Larson pointed out, calls made during Occupy Wall Street for the wide-scale cancellation of student debt were met by the media with mockery. Now, thanks to the tireless work of activists, these demands have made their way into a major presidential plank. It’s a testament not just to the power of organizing, but also to a problem that binds us together: We are a nation of debtors. What if we treated that as a public problem, rather than an individual responsibility?