Elizabeth Warren's plan to forgive student loan debt could lead to an economic boom
A plan to forgive almost a trillion dollars in debt would solve the student loan debt crisis, but can it work?
- Sen. Elizabeth Warren has just proposed a bold education reform plan that would forgive billions in student debt.
- The plan would forgive the debt held by more than 30 million Americans.
- The debt forgiveness program is one part of a larger program to make higher education more accessible.
Student loans are a leading cause of debt in the United States. Edging out credit cards for the number two spot, 45 million Americans are into their creditors for at least 1.5 trillion dollars' worth of student loan debt. This weighs down on the economy, as money that could be spent on starting businesses, buying homes, or paying for basic needs is instead spent on servicing debt.
These numbers make it easy to understand why people are so keen about ideas for universal tuition-free higher education, however, those plans would do little for those already drowning in student loan debt. Perhaps that is why Sen. Elizabeth Warren announced that her education plan would not only open up the colleges to all no matter what their ability to pay but also reduce the debt held by millions upon millions of Americans.
Elizabeth Warren’s Debt Free Jubilee
Warren, one of 19 Democrats currently running for president, has announced a bold education reform plan. It hits on many of the significant democratic talking points in proposing that the federal government step in and make two- and four-year undergraduate programs tuition free at public universities. But her policy differs from those of other Democrats in that she would also forgive the debt of many Americans who are already out of school.
Her policy proposal, laid out in detail in a Medium post, includes at least partial forgiveness for 95 percent of the Americans who have student debt. The plan would cancel up to 50,000 dollars in such debt for everyone with a household income up to 100,000 dollars a year.
She explained in her post how the benefit would slowly phase out after household income rises above that:
"The $50,000 cancellation amount phases out by $1 for every $3 in income above $100,000, so, for example, 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."
Americans making more than 250,000 dollars a year with student debt would get no relief under her program, but they do get to continue being in the 95th percentile of income. They'll probably be fine.
Debt owed to the government would be cancelled automatically using information Uncle Sam already has. Privately held loans would also be eligible for cancellation, though the government would have to work with the banks and creditors who hold that debt to arrange that relief.
How many people would benefit? Who are they?
Elizabeth Warren claims her plan would completely obliterate the debt held by 75 percent of those holding student loan debt and provide some form of relief for 95 percent of people with such debt. Some quick math shows us that this works out to be a direct boon to 42 million people. There are also considerations for low- income students who might have a hard time affording room and board even after tuition is abolished.
As higher education policy gets complicated when race gets involved, her plan also has considerations for Historically Black Universities and state-driven programs to help improve outcomes for low-income students and students of color.
What are experts saying about this?
An analysis carried out by Brandeis University predicted that there would be a positive economic result from her plan, as the sudden removal of such a tremendous debt burden from so many people would lead to "consumer-driven economic stimulus, improved credit scores, greater home-buying rates and housing stability, higher college completion rates, and greater business formation."
The proposal was similarly praised by Former Secretary of Labor Robert Reich on his Facebook page, where he said "Eliminating student debt would be a big boost for the economy. It would allow millions of young people to invest in things like buying a home or starting a business. Ensuring the next generation can compete in the global economy — without taking out crushing loans — is essential to rebuilding the American middle class."
On the right, criticism has been quick to materialize. Neal P. McCluskey, the director of the Center for Educational Freedom at the Cato Institute, told the New York Times that the plan would be unfair to taxpayers "who had no choice but to give them that money, on the terms the borrowers voluntarily agreed to."
One obvious pitfall does exist with her plan, similar to one that has plagued the Affordable Care Act. According to Vox's Ella Nilsen, the program would require states to accept the federal money to make their schools tuition-free. As the experience of trying to give states free money for health care shows us, some states will refuse to do so out of principle or spite.
What’s the thinking behind this?
Education is one of the best investments a country can make, paying back every dollar in investment in several dollars of new economic growth. Her reform plan not only helps people get out of debt and frees their cash for better use elsewhere but will allow others to go to college that might not have been able to otherwise, improving their lifetime earning potential.
Beyond this, Warren's plan calls for a fundamental rethinking of how Americans view higher education. While many Americans consider higher education an investment in their futures to be made worthwhile with higher earnings later, Warren's plan takes the view that a college education is every bit as necessary to both individuals and society in the 21st century as a high school education was in the 20th, and should be treated as such by the government.
What will it cost?
The debt forgiveness plan would cost Uncle Sam $640B up front, and the free college tuition plan would cost $1.25T over the next 10 years. Senator Warren has pointed out this could be paid for entirely with her Ultra-Millionaires tax that would levy a 2 percent surtax on all fortunes valued over $50M dollars with an additional 1 percent would be tacked on for every billion in wealth.
Of course, we must also ask what it will cost not to forgive the debt. Not only does the cost of college and the burden of debt cause young adults to struggle to make ends meet, but it is proven to reduce college graduation rates. Federal Reserve Chairman Jerome Powell said that the student loan debt crisis "absolutely could hold back economic growth."
Given these considerations, Warren's plan may turn out to be a wise investment.
The price of a college education in the United States has grown dramatically over the years. Many proposals have been put forward to solve the problem, but only one plan currently exists to forgive the debt of those who already finished school. If the United States will enact such a policy remains in question, but its proposal suggests that many Americans are ready for a new way of thinking about higher education.
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What can 3D printing do for medicine? The "sky is the limit," says Northwell Health researcher Dr. Todd Goldstein.
- Medical professionals are currently using 3D printers to create prosthetics and patient-specific organ models that doctors can use to prepare for surgery.
- Eventually, scientists hope to print patient-specific organs that can be transplanted safely into the human body.
- Northwell Health, New York State's largest health care provider, is pioneering 3D printing in medicine in three key ways.
A recent study gives new meaning to the saying "fake it 'til you make it."
- The study involves four experiments that measured individuals' socioeconomic status, overconfidence and actual performance.
- Results consistently showed that high-class people tend to overestimate their abilities.
- However, this overconfidence was misinterpreted as genuine competence in one study, suggesting overestimating your abilities can have social advantages.
Is this proof of a dramatic shift?
- Map details dramatic shift from CNN to Fox News over 10-year period
- Does it show the triumph of "fake news" — or, rather, its defeat?
- A closer look at the map's legend allows for more complex analyses
Dramatic and misleading
Image: Reddit / SICResearch
The situation today: CNN pushed back to the edges of the country.
Over the course of no more than a decade, America has radically switched favorites when it comes to cable news networks. As this sequence of maps showing TMAs (Television Market Areas) suggests, CNN is out, Fox News is in.
The maps are certainly dramatic, but also a bit misleading. They nevertheless provide some insight into the state of journalism and the public's attitudes toward the press in the US.
Let's zoom in:
- It's 2008, on the eve of the Obama Era. CNN (blue) dominates the cable news landscape across America. Fox News (red) is an upstart (°1996) with a few regional bastions in the South.
- By 2010, Fox News has broken out of its southern heartland, colonizing markets in the Midwest and the Northwest — and even northern Maine and southern Alaska.
- Two years later, Fox News has lost those two outliers, but has filled up in the middle: it now boasts two large, contiguous blocks in the southeast and northwest, almost touching.
- In 2014, Fox News seems past its prime. The northwestern block has shrunk, the southeastern one has fragmented.
- Energised by Trump's 2016 presidential campaign, Fox News is back with a vengeance. Not only have Maine and Alaska gone from entirely blue to entirely red, so has most of the rest of the U.S. Fox News has plugged the Nebraska Gap: it's no longer possible to walk from coast to coast across CNN territory.
- By 2018, the fortunes from a decade earlier have almost reversed. Fox News rules the roost. CNN clings on to the Pacific Coast, New Mexico, Minnesota and parts of the Northeast — plus a smattering of metropolitan areas in the South and Midwest.
Image source: Reddit / SICResearch
This sequence of maps, showing America turning from blue to red, elicited strong reactions on the Reddit forum where it was published last week. For some, the takeover by Fox News illustrates the demise of all that's good and fair about news journalism. Among the comments?
- "The end is near."
- "The idiocracy grows."
- "(It's) like a spreading disease."
- "One of the more frightening maps I've seen."
- "LOL that's what happens when you're fake news!"
- "CNN went down the toilet on quality."
- "A Minecraft YouTuber could beat CNN's numbers."
- "CNN has become more like a high-school production of a news show."
Not a few find fault with both channels, even if not always to the same degree:
- "That anybody considers either of those networks good news sources is troubling."
- "Both leave you understanding less rather than more."
- "This is what happens when you spout bullsh-- for two years straight. People find an alternative — even if it's just different bullsh--."
- "CNN is sh-- but it's nowhere close to the outright bullsh-- and baseless propaganda Fox News spews."
"Old people learning to Google"
Image: Google Trends
CNN vs. Fox News search terms (200!-2018)
But what do the maps actually show? Created by SICResearch, they do show a huge evolution, but not of both cable news networks' audience size (i.e. Nielsen ratings). The dramatic shift is one in Google search trends. In other words, it shows how often people type in "CNN" or "Fox News" when surfing the web. And that does not necessarily reflect the relative popularity of both networks. As some commenters suggest:
- "I can't remember the last time that I've searched for a news channel on Google. Is it really that difficult for people to type 'cnn.com'?"
- "More than anything else, these maps show smart phone proliferation (among older people) more than anything else."
- "This is a map of how old people and rural areas have learned to use Google in the last decade."
- "This is basically a map of people who don't understand how the internet works, and it's no surprise that it leans conservative."
A visual image as strong as this map sequence looks designed to elicit a vehement response — and its lack of context offers viewers little new information to challenge their preconceptions. Like the news itself, cartography pretends to be objective, but always has an agenda of its own, even if just by the selection of its topics.
The trick is not to despair of maps (or news) but to get a good sense of the parameters that are in play. And, as is often the case (with both maps and news), what's left out is at least as significant as what's actually shown.
One important point: while Fox News is the sole major purveyor of news and opinion with a conservative/right-wing slant, CNN has more competition in the center/left part of the spectrum, notably from MSNBC.
Another: the average age of cable news viewers — whether they watch CNN or Fox News — is in the mid-60s. As a result of a shift in generational habits, TV viewing is down across the board. Younger people are more comfortable with a "cafeteria" approach to their news menu, selecting alternative and online sources for their information.
It should also be noted, however, that Fox News, according to Harvard's Nieman Lab, dominates Facebook when it comes to engagement among news outlets.
CNN, Fox and MSNBC
Image: Google Trends
CNN vs. Fox (without the 'News'; may include searches for actual foxes). See MSNBC (in yellow) for comparison
For the record, here are the Nielsen ratings for average daily viewer total for the three main cable news networks, for 2018 (compared to 2017):
- Fox News: 1,425,000 (-5%)
- MSNBC: 994,000 (+12%)
- CNN: 706,000 (-9%)
And according to this recent overview, the top 50 of the most popular websites in the U.S. includes cnn.com in 28th place, and foxnews.com in... 27th place.The top 5, in descending order, consists of google.com, youtube.com, facebook.com, amazon.com and yahoo.com — the latter being the highest-placed website in the News and Media category.
If you thought your mother was pushy in her pursuit of grandchildren, wait until you learn about bonobo mothers.
- Mother bonobos have been observed to help their sons find and copulate with mates.
- The mothers accomplish this by leading sons to mates, interfering with other males trying to copulate with females, and helping sons rise in the social hierarchy of the group.
- Why do mother bonobos do this? The "grandmother hypothesis" might hold part of the answer.
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