Warren’s plan aids overburdened graduates
Sen. Elizabeth Warren’s plan for college aid and debt forgiveness recognizes just how broken our system of financing higher education has become.
From 1980 to the mid-1990s, the wage boost connected to a college degree rose significantly. Young adults were told a degree was as close to a sure thing as any investment could be. But starting in the mid-1990s, states cut spending on public universities, and students had to bear ever increasing costs. Again they were told it was worth it — even if it meant taking on debt. The Great Recession supercharged state cutbacks and tuition hikes. The onesize-fits-all advice to get a degree, by borrwoing if necessary, also helped spur the rise of for-profit colleges.
But since the mid-1990s, growth in the college wage premium has slowed to a crawl, while debt loads have raced forward. And college is not a financial guarantee. A fifth of men ages 25-34 with degrees earn less than the average worker with just a high school diploma, and many take on debt without earning a degree. For-profit colleges add additional risk; two-thirds of African Americans with for-profit college debt were in default within 12 years.
Warren’s plan offers debt-free options for future college attendees. It makes needed investments in historically black institutions. It starves the predatory for-profit system of public subsidies. Most ambitiously, it forgives past student debt, providing recompense for years of urging students to take on ever more debt while overstating the benefits and understating the risks of going for a college degree.
Of course, many students took on debt and are doing just fine — but that’s why debt forgiveness fades as incomes rise. Further, because she has proposed progressive taxes to pay for it, Warren’s plan is clearly not the giveaway to privileged college graduates that some claim. Most important, when determining who benefits, how do we factor in the talented young people chased away from the opportunity to go to college because they were understandably terrified of the debt it required?