Will the 2020 Election Bring an End to Student Debt?

From climate change to immigration to an escalating trade war, the United States faces a spate of crises from all directions. Yet for many recent (and not-so-recent) college grads, one crisis feels particularly salient: the crisis of student loan debt. Today, the country’s more than 44 million borrowers owe a combined $1.5 trillion in student debt, which now represents the second-highest category of consumer debt, outranked only by mortgages. More staggering still, researchers estimate that as many as 40 percent of those borrowers could default.

The current administration has put forth several policies that will affect the crisis. In March, President Trump signed an executive order that aimed to protect free speech on college campuses and that included two debt-related provisions: one directing the Department of Education to publish more information about graduates’ income and debt levels at a given college, and one asking the department to propose policy that holds colleges accountable for student outcomes. Earlier in the month, the White House put pressure on Congress to include a cap on student loan borrowing as lawmakers consider tweaking the Higher Education Act. Senator Patty Murray (D-WA) critiqued the idea of a cap, saying it ignores the fact that most students cannot afford college without accruing debt.

The president’s 2020 budget proposal, released in March, not only slashes the Department of Education’s budget by 10% but also directly affects borrowers by eliminating the Public Service Loan Forgiveness Program (PSLFP). The current program wipes student debt after eligible workers make on-time payments for ten years and is meant to ease stress on borrowers in lower-paying civil service sectors, such as teaching, public defense, and social work. The proposed budget would cap monthly undergraduate loan payments at 12.5% of income and forgive remaining debt after fifteen years. Graduate loans would be forgiven after thirty years. Yet the plan would end subsidized student loans, meaning that the government would no longer pay interest on federal loans while borrowers are in school.

For Democrats looking to unseat Trump in 2020, college affordability and student loan debt have predictably become litmus-test issues. As the debates roll on and the policy proposals roll out, borrowers across the country will be asking, What are the top candidates’ stances on debt and tuition, and who has the most impressive ideas? Below are a few policy proposals that stand out in a crowded political landscape.

Debt Forgiveness for Present Borrowers, Free College for Future Students

Bernie Sanders (US Senator, Vermont): Free College for All and Complete Debt Forgiveness

• Signature “free college for all” proposal released during 2016 presidential run
• Now suggests wiping the slate clean of student debt, thus absolving all 44 million borrowers of repayment obligations with no strings attached
• Still stands by the idea of free college
  • Under his plan, states would cover 33% of tuition costs for public institutions, and the federal government would handle the rest.
• Comprehensive proposal introduced with progressive Representatives Ilhan Omar (D-MN) and Pramila Jayapal (D-WA)
  • Caps student loan interest rates
  • Expands Pell Grants
  • Cancels tuition at trade schools and apprenticeships
  • Provides more funding for Historically Black Colleges
• “Wall Street speculation tax” to pay the estimated $2.2 trillion cost of the plan by siphoning off financial investment transactions
• Plan has been criticized for potentially benefiting the wealthy, particularly those with debt from their graduate degrees who already enjoy expanded financial opportunities
• Sanders’s response to critiques: “I believe in universality. That means that if Donald Trump wants to send his grandchildren to a public school, he has the right to do that.”

Julián Castro (Former Secretary of Housing and Urban Development): Free College for All and Debt Forgiveness for Some

• Involved in education policy on the broad scale
• Proposal released in May would:
  • Establish universal pre-K
  • Shift the student debt repayment process
  • Do away with tuition at public universities and community colleges
• Proposed repayment system would:
  • Raise the threshold at which a borrower could stay current on their debt with zero dollar payments
  • Eliminate taxes on loan forgiveness after twenty years of payments
• Castro has also proposed:
  • Expanding Pell Grants
  • Establishing a loan forgiveness program for individuals receiving certain public assistance benefits, such as SNAP
  • Improving educational opportunities for incarcerated adults and children
  • Providing federal student aid eligibility for DACA recipients and Temporary Protected Status holders
• Like Biden, Warren, and Sanders, Castro suggests funding his $1 trillion plan by repealing Trump-era tax cuts and hiking taxes for corporations and the rich.

Debt Forgiveness for Present and Future Borrowers

Elizabeth Warren (US Senator, Massachusetts): Partial Debt Forgiveness Depending on Income

• Proposed large-scale student loan bailout has more caveats than Sanders’ plan
• Cosponsored by moderate House Majority Whip Jim Clyburn (D-SC)
• Looks to address criticisms of debt cancellation as a handout to the wealthy by capping forgiveness
  • Limit of $50,000 for those earning less than $100,000 annually
  • Progressively lower limits for those earning less than $250,000
  • Anyone bringing in more than $250,000 would not be eligible.
  • Still amounts to forgiveness for over 95% of borrowers, and total forgiveness for more than 75%
• Warren has suggested an “Ultra-Millionaire” tax of 2% annually on the 75,000 families with at least $50 million in net worth but has not confirmed whether earnings from the tax would go toward debt forgiveness.
• Warren’s campaign asserts that scholars and education advocates believe the plan would reduce the racial wealth gap and improve financial futures for a debt-burdened generation.
• Brookings Institution report suggests that the proposal falls short of addressing income inequality
  • Top 20% of households would receive about 27% of annual savings
  • Bottom 20% would reap just 4%

Andrew Yang (Entrepreneur): Expanded Debt Forgiveness Programs

• Known for signature policy proposal of establishing a universal basic income
• Has also addressed the problem of loans and college affordability specifically, calling for:
  • Zero interest on student loans
  • A 10×10 Student Loan Emancipation Plan, which would allow for forgiveness after ten years if borrower dedicates 10% of salary to repayment
  • Partial or total forgiveness for borrowers who do not graduate, as well as for borrowers who work in rural areas or with underserved populations

Expanded Access and Financial Assistance

Pete Buttigieg (Mayor of South Bend, Indiana): Expanded Access

• Has publicly acknowledged personal stake in the debt discussion: In combination with his husband, Chasten, Buttigieg owes about $130,000 in student loans
• Supports state-subsidized tuition costs, debt-free college for low-income students, expanded Pell Grants, and an improved PSLFP
• Does not back the idea of free college for all, suggesting that higher-income families should pay at least some tuition
• During debates on 28 June, spoke to the need for improved job prospects and quality of life regardless of an individual’s level of education
  • Could be achieved through policies such as a $15 minimum wage, Buttigieg has suggested
  • “Yes, it needs to be more affordable in this country to go to college. It also needs to be more affordable in this country to not go to college.”

Joe Biden (Former Vice President): Free Community College for All

• Supports the idea of free community college tuition
  • Originally proposed in 2015 by President Obama
• Has suggested that the $6 billion annual price tag attached to funding the program could be covered by rolling back Trump-era tax cuts
• Voiced support for partial debt forgiveness during debates on 27 June
  • Suggested loan relief for borrowers making less than $25,000 annually
• In an education plan released in May, promised an improved PSLFP that is “fixed, simplified and actually helps teachers”

Cory Booker (US Senator, New Jersey): Accountability for Loan Servicers and Expanded Access

• Key proposal aims to narrow the racial wealth gap and could also provide families with an innovative resource for financing college
  • Bill would establish an account with $1,000—or a “baby bond”—to every baby born in the United States
  • Account would receive a deposit of up to $2,000 each year depending on family income
  • Allows account holder, at eighteen, to collect the funds and use them to defray the cost of college
• Booker joined Warren on 27 June to confront student loan servicers
  • Wrote to the Department of Justice and the Federal Trade Commission asking the agencies to review a merger between Nelnet and Great Lakes
  • In combination, the two manage nearly 40% of outstanding student debt nationwide.
  • Servicers such as these have faced criticism from consumer advocates and lawmakers for inflaming the student loan crisis by failing to provide borrowers with adequate information.

Kamala Harris (US Senator, California): Expanded Access to Debt-Free Education

• Has voiced support for the Debt-Free College Act introduced by Senator Brian Schatz (D-HI), as well as for Sanders’ debt forgiveness bill
• In answer to questions about student debt at a CNN town hall, cited the need for:
  • Debt-free education
  • Reformed Pell Grant system
  • An end to predatory for-profit colleges
• Fought for-profit colleges as California attorney general
  • Worked to uncover fraud at for-profit Corinthian Colleges
  • Office won a judgment of more than $1 billionagainst the now-defunct chain

As proposals for mitigating student loan debt move from concept to reality, candidates and voters alike need to dive deeper into the details. Forbes suggests that key considerations should include the ideal role of the federal government in issuing loans; the ideal role of the private sector, including banks; how the federal government will afford refinancing loans; and the proper balance between the interests of students and taxpayers when it comes to loan debt.

According to Vox, the entire debate may be more of a discursive and philosophical tool than a catalyst for actual change: For the most part, the candidates’ plans ultimately vest authority in governors and state legislatures, leaving the debt-free and free-college movements within the purview of states. Either way, the 44 million borrowers across the country—as well as the parents and loved ones with an emotional or financial stake in their debt—will be watching closely and envisioning a future in which the rhythms of their spending and saving are not dictated by monthly payments to Sallie Mae.