Pretty much everyone agrees that student loans are a crisis facing Americans today. However, the solutions about how to help people with heavy loan burdens, or how to prevent excessive borrowing in the future, is very much up in the air.
Senator Elizabeth Warren made big headlines earlier this week by proposing to eliminate up to $50,000 in student loan debt per person. But she’s not the only one that has big ideas and proposals for student loan debt.
In fact, most major candidates have spoken about or even have endorsed specific policies.
Let’s look at some of the big proposals and thoughts from the main contenders for 2020 when it comes to student loan debt.
Republican: Donald Trump
Usually, nobody from the same party makes a serious run against a sitting president, so it’s most likely that President Trump will stay the only person on the Republican side of this list.
In general, Trump doesn’t seem very interested in student loans as an issue – he doesn’t really talk about it personally although some of his advisors have.
YOU MAY ALSO LIKE
The Department of Education, under Betsy DeVos, has just released some new proposals on student loans. It’s early to say whether or not these will be adopted, but they seem to be the direction Trump wants to go.
One proposal would reduce the number of federal loan repayment programs to two: a standard ten-year plan and an income-driven plan that would cap repayments at 12.5% of discretionary income and offer forgiveness after 15 years.
The second proposal would cap the amount parents and graduate students can borrow from the federal government (undergraduates already have a cap) at an unspecified amount.
These two proposals are decent ideas, but they both don’t do much to address the current student loan crisis.
Democrats: A Massive Field, but All Interested in Limiting Borrower Exposure
In general, the Democrats running are all far to the left of the current administration when it comes to student debt. Most of them want to address the situation of current borrowers either by allowing them to get better rates or by eliminating some or all student debt.
Some candidates are more aggressive than others in terms of going after lenders and loan servicers, too.
Democrat: Elizabeth Warren
Elizabeth Warren was a college professor before she got elected to the Senate, where she’s on the Senate Education Committee. She helped create the Consumer Financial Protection Bureau (CFPB), which used to be one of the strongest advocates for student borrowers against unsavory lender and servicer practices.
As a result of both her background in education and as an advocate for the lower-income people caught in the bigger financial systems that make up the American economy, Warren has been a very strong proponent of student debt relief. Most recently, she pushed for the Temporary Expanded PLSF program to help public servants who didn’t get the loan forgiveness they’d been expecting. She’s co-sponsoring Kirsten Gillibrand’s plan to overhaul Public Service Loan Forgiveness (see below).
And if you follow the news recently, you’ve probably heard that she just released a new plan to cancel most Americans’ student debt. You should read the whole plan, but the basics are that up to $50,000 of student debt per person could be wiped out.
That would mean that 75% of Americans with student loan debt would have it totally cancelled, while 95% of Americans with student loan debt would receive some benefit. (The cancellation would phase out gradually for individuals with income between $100,000 and $250,000, and those with income above $250,000 would not receive the benefit.) It would be paid for by her Ultra-Millionaire Tax.
Warren pitches this plan for two reasons: first, it would rectify an injustice done to younger generations who, unlike their parents and grandparents, weren’t able to access nearly free public higher education; and second, it would be a huge stimulus to the economy as student debtors started spending those loan payments on other things.
Democrat: Kirsten Gillibrand
Gillibrand is a co-sponsor of the 2018 “Debt-Free College Act of 2018,” another messaging bill that doesn’t have the votes to pass now but helps get conversation going. It’s also co-sponsored by Warren, Harris, and Cory Booker. What it would do is offer federal matching funds to states for preventing undergraduates from taking on debt to attend public colleges. (Matching funds are a big tool for the federal government when it can’t constitutionally do something it wants to do by just passing a law; instead, it can “incentivize” states to pass the laws. This is how we got mandatory speed limits and set the drinking age at 21, for example.)
Gillibrand’s website also states: “Student debt is an out-of-control crisis in this country, and it isn’t just a burden on individual graduates—it’s a drag on the whole economy. We need to allow graduates and their families to refinance their student loans at lower rates, unleashing billions into the economy.” She clarified on twitter that she was thinking about refinancing at 4%, a level she’s introduced legislation on in the past.
So, even though she isn’t a co-sponsor of Sanders’ 2017 bill, she does agree with the idea that refinancing and lowering interest burdens could be a big help.
Gillibrand also just released a major proposal to benefit some student borrowers: a big overhaul of the Public Service Loan Forgiveness program (PSLF). Warren, Sanders, Harris, Klobuchar, and Booker, the other major Democratic senators running, are all co-sponsors. The bill would do a lot to expand access to PSLF, including making more types of loans and payment plans eligible for participation and reducing the time to forgiveness dramatically.
Democrat: Bernie Sanders
Bernie Sanders wants to make undergraduate public education tuition-free. But his 2017 “College for All Act” proposal includes major provisions on student loans, too. (This is a little confusing if you’re not used to how American government works, but Congressmen routinely introduces legislation they know is not going to pass. They do it in order to get their ideas ‘officially’ out there in hope that they will eventually work their way into law or to act as advertising for their values.)
The first thing Sanders’ legislation would do is cut student loan interest rates by returning to a pre-2006 formula for calculating them. He says they’d drop to under 3% in the current environment, and could never rise higher than 8.25%. Next, the legislation would enable all borrowers (even those with bad credit or in default) to refinance their loans at the current rates.
Sanders is also a co-sponsor of Gillibrand’s PSLF bill.
Democrat: Kamala Harris
Kamala Harris co-sponsored Sanders’ “College for All Act,” but her real action has been on loans to for-profit college students. Harris has been a very active player against unscrupulous for-profit colleges, believing that they take advantage of loose federal borrowing laws to fund themselves. Harris’s lawsuit as Attorney General of California (before she entered the Senate) played a role in the Corinthian Colleges closure. She then advocated for Corinthian students’ debts to be canceled. (She was a Senator by this time.)
Harris is a co-sponsor on Gillibrand’s PSLF bill.
Democrat: Pete Buttigieg
Pete Buttigieg, currently the mayor of South Bend, IN, is the youngest candidate in the Democratic field – and he’s been talking in his early campaigning about how his husband, a middle school teacher, is still paying off his own student loan debt in his mid-30s.
Unlike the Senators in the rest of the field, Buttigieg hasn’t had an opportunity to do much about student debt, but he says that as president he’d work to increase the robustness of public service loan forgiveness. He’s also open to some more blanket loan cancellation, although in a fairly vague “we should look at all options” way as of yet.
Democrat: Amy Klobuchar
Klobuchar, a Senator from Minnesota, has been pushing hard to deal with the massive pileup of loan forgiveness requests for students who were defrauded by predatory for-profit colleges like Corinthian. She was the main mover on a letter earlier in 2019 to the Education Department urging them to move more quickly on loan forgiveness for these former students.
She’s also in favor of better loan refinancing options, and has some personal experience—her husband, like Buttigieg’s, came into the marriage with tens of thousands in student debt.
She’s also a co-sponsor of Gillibrand’s PSLF bill.
Democrat: Cory Booker
Cory Booker, who is a senator from New Jersey, is a major co-sponsor of the 2018 Debt-Free College Act, which Gillibrand, Harris, and Warren also support. It would use federal matching funds to incentivize states to eliminate student loans for undergraduates at public colleges.
His “baby bonds” proposal is also aimed at eventually eliminating student debt by giving children money they could use to pay for college.
Booker also wants to forgive teachers’ student loan debt, and co-introduced a proposal to do that last year. However, he’s been relatively quiet on what to do about other existing debt.
He’s a co-sponsor of Gillibrand’s PSLF bill.
Democrat: Joe Biden
Technically Biden, the former vice-president, isn’t running yet. But he’s polling well enough to be worth including here.
Biden has a big problem when it comes to student loans: as a senator from Delaware (before he was VP), he was the major force behind the bankruptcy reform bill that made it impossible to discharge private student loan debt in bankruptcy. He’s been widely criticized for prioritizing banks and credit cards over borrowers. His specific interest in making it harder for student borrowers to discharge debt goes back decades.
(Elizabeth Warren was one of his major foes in that fight, and the two stories I just linked are a good map to the backstory on some of these Democratic primary battles.)
Biden’s spokesman says that the private student loan situation has changedsince he fought for the bankruptcy bill. And it is true that the Obama administration tried to get congress to reverse the part of the bill on private student loan debt (it didn’t go anywhere.) If he does end up running, you can expect that he’ll have to address this part of his congressional legacy pretty extensively during the debates. But so far his roundup of known policy positions doesn’t include the word “loans.”
Democrat: Beto O’Rourke
As a senate candidate, O’Rourke proposed forgiving debt for students who move home to a struggling area (rather than moving away to large cities, which many must do to seek employment to pay off loans.) He’s also proposed loan forgiveness for teachers in needy schools, though he hasn’t clarified the details and how his proposal might differ from existing forgiveness programs.
Democrat: Julian Castro
No proposals on student debt yet. He did say “we need to erase it” in an interview with Salon, but how to do that and for whom to do it is up in the air. He’s said a bit more about the need to eliminate future students’ debt by making programs tuition free.
Democrat: Eric Swalwell
Like Buttigieg, Swalwell is running as a millennial candidate. I’m giving him his own slot here because he has been really focused on student loans as a Congressman. He talks often about his own heavy student debt load (currently around $100,000) and proposals to address the crisis have been front and center in his congressional office. This is a great and detailed roundup of his positions but I’ll highlight two here: eliminating student loan interest altogether and helping employers contribute to their employees’ debt payoff by making such contributions tax-free.
Democrats: Minor Candidates
With such a giant field, no Democrat is really polling all that well. But some candidates seem more minor than others currently. Nevertheless, some of them have ideas on student loans.
Jay Inslee, the governor of Washington, signed a bill that limits bad practices by student loan servicers. (His campaign focuses on climate change.)
Tulsi Gabbard, a congresswoman from Hawaii, was a major Sanders supporter in 2016, and has signed on to his plan (above).
Finally, if you really want to get into the weeds, there are a few othercandidates that you’ve really never heard of also have some ideas on student debt, and who knows, perhaps they’ll become part of the conversation.
How to Have a Say
If you want to have a say in who the Democratic or Republican candidate for president will be, you’ll need to be properly registered to vote by the time the primaries start next January.
While some states permit voting in a party primary even if you’re not registered in that party, most likely you’ll need to be registered as a Democrat or a Republican in whatever state you plan to vote in.
Have a look at your state’s rules on primary voting now (Google “STATENAME voter registration primary”) and see if you need to adjust your registration. Keep in mind that party membership doesn’t force you to agree with all of a party’s positions or to vote one way or another in the general election—it just allows you to vote in the party primary and thus to have a say in who the general election candidate is.
Robert Farrington founded The College Investor, a personal finance website dedicated to helping people get out of student loan debt and start investing as early as possible.