Presidential candidate and U.S. Senator Elizabeth Warren has promised to forgive around $1.6 trillion in student loans on the first day of her presidency — and she says she's going to bypass Congress to do it.
As Forbes reported, Warren unveiled her plan on Tuesday to use a little-known shortcut in order to legally go over the heads of Congress and cancel the debts of tens of millions of student borrowers.
According to the Board of Governors of the Federal Reserve System, the average student loan debt was $29,000 in 2018.
Until now, the U.S. Department of Education has only offered student loan forgiveness or cancellation to those who meet certain criteria, such as working in a public service position or becoming disabled.
That July, she introduced a bill that would allow her to do so. The Student Loan Debt Relief Act would eliminate student debt entirely for 75% of borrowers and partially for another 20%.
However, her latest proposal explains that she "can't afford to wait for Congress."
As per the plan outlined on her website, Warren would use her presidency to instruct the Secretary of Education to begin student loan forgiveness on the first day of her hypothetical administration.
Some lawyers have actually confirmed that this is indeed legal, since the Higher Education Act gives the secretary the power to "create and to cancel or modify debt owed under federal student loan programs."
Excluded from the cancellation are any households with a total income of more than $250,000, who Warren says are the Top 5% of earners.
She also said she will implement "phase-outs" based on income. The $50,000 cancellation would decrease by $1 for every $3 income above $100,000. As Warren explains online,
"A person with household income of $130,000 gets $40,000 in cancellation, while a person with household income of $160,000 gets $30,000 in cancellation."
Sen. Bernie Sanders said he will set no criteria for student loan forgiveness, meaning anyone with student debt would be eligible for cancellation.
His plan will be funded through a new tax on financial transactions, which he estimates could raise more than $2 trillion over 10 years.
Other candidates, such as Joe Biden and current President Donald Trump, have offered up ways to repay student loans, but have not revealed any plans for a nation-wide loan forgiveness.
h/t: Forbes, Elizabeth Warren
