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Senator Elizabeth Warren, who lobbied hard for President Joe Biden to forgive $50,000 in student loan debt per borrower, said his much smaller plan can still address racial and gender wealth inequality and help tame inflation.
“Sure I argued for more, and I think there’s more that we can do,” Warren said in an interview Friday. “But it’s important to stop and celebrate this historic moment.”
The Massachusetts Democrat said she, Majority Leader Chuck Schumer and Senator Raphael Warnock met with Biden on multiple occasions to push him on student loan forgiveness. All three of them supported the $50,000 figure.
Warren had directly engaged with Biden on the issue even before he was inaugurated, according to a person familiar with the discussions. She’s also had dozens of calls with White House staff and education officials and advocated in recent months for a larger amount of forgiveness for targeted groups, including Pell grant recipients.
Biden announced his student debt forgiveness package Wednesday after months of deliberation. Under the plan, Pell grant recipients with outstanding federal student loans would have up to $20,000 forgiven and other borrowers would have up to $10,000 wiped away. There is a $125,000 income cap for individuals to be eligible and $250,000 for married couples.
Biden also extended a moratorium on federal student loan repayments through Dec. 31 and proposed a new income-driven repayment plan that would cap monthly payments at 5% of the borrower’s discretionary income.
Federal loans account for $1.6 trillion of student loan debt in the US and 43 million borrowers could stand to benefit from Biden’s plan.
Critics of Biden’s plan, including some policy experts, have raised concerns that canceling the student debt would add to inflation, which has been rising at the fastest pace in four decades.
Senate GOP Leader Mitch McConnell said in a statement Wednesday the debt forgiveness would add to inflation and is “a slap in the face to every family who sacrificed to save for college, every graduate who paid their debt, and every American who chose a certain career path or volunteered to serve in our Armed Forces in order to avoid taking on debt.”
However, Goldman Sachs economists in a report said they expect any impact on inflation from the plan to be small. And middle-income households would benefit the most from debt forgiveness.
Warren said restarting loan payments next year will counter inflationary effects.
“The president has linked cancellation to restarting loan payments,” she said. “So 23 million Americans will be paying an average of about $400 a month on their student loan debts. That takes money out of the economy and helps calm inflation.”
Warren and other progressives, including Representative Ayanna Pressley, were consistent in their calls for Biden to forgive at least $50,000 in student debt per borrower. The Congressional Black Caucus pushed the White House for a higher level of forgiveness as well.
Warren said forgiving $50,000 in debt would do the most to help close the racial and gender wealth gaps but that Biden’s plan still will help address inequalities.
More than 50% of Black borrowers report a net worth less than they owe in student debt and are the most likely group to struggle financially due to student debt, according to the Education Data Initiative. On average, Black college graduates owe $25,000 more in student debt than White college graduates.
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