Here’s what you need to know.
Student Loan Debt Forgiveness
A. Wayne Johnson was a senior Department of Education official who was hired to help manage the Federal Office of Student Aid, which oversees approximately $1.5 trillion in federal student loan debt. Two years later, Johnson said the federal government shouldn’t lend student loansand believes that most federal student loans will not be repaid.
Johnson, who is now running for U.S. Senate in Georgia, proposed a new student loan forgiveness plan:
- Forgive up to $50,000 in federal student loans to any borrower
- Offer a tax credit of up to $50,000 to people who have already repaid their student loan.
- Provide a $50,000 government bond, which would not require repayment, to new student borrowers to cover four years of college or university tuition.
- Institute a 1% tax on corporate profits to fund the proposal
Johnson estimates that $925 billion in student loan debt can be forgiven under his student loan forgiveness plan, which he says would write off student loan debt entirely for about 37 million borrowers. Johnson’s does not offer student loan forgiveness for private student loans. However, Johnson is open to the idea of income-sharing agreements (ISAs), which allow students to pay an investor a fixed percentage of their earnings in exchange for the investor funding their education.
DeVos recently appeared on Special report with Brett Baier on FoxNewsand shared his views on the notion of student loan debt forgiveness, which has been proposed by several Democratic presidential candidates, including Sen. Bernie Sanders (I-VT) and Sen. Elizabeth Warren (D-MA) .
“Their proposals are crazy“, DeVos said. “Who do they think is actually going to pay for this? Two out of three Americans who don’t go to college will pay for the one in three who do.”
Bernie Sanders: Cancel all student loan debt
Sanders has proposed the most ambitious plan yet to deal with the nation’s student debt. Simply put, Sanders’ plan would cancel all $1.6 trillion in federal grants and private student loan debt. There are no eligibility criteria; everyone qualifies. Sanders will fund his student loan forgiveness plan through a new financial transaction tax, which he says could raise more than $2 trillion over the next 10 years.
Elizabeth Warren: Forgive 95% of student loan debt
Johnson’s plan would forgive more student loan debt than Warren’s. Warren’s plan would cancel student loan debt for more than 95% of borrowers and fully cancel student loan debt for more than 75% of Americans with student loan debt. Warren’s plan would forgive $50,000 in student loan debt for each person whose household income is less than $100,000.
His plan also provides substantial debt cancellation for each person with a household income between $100,000 and $250,000. Importantly, Warren’s plan offers no student loan debt forgiveness to borrowers with household incomes over $250,000, which she says is the top 5 percent. Warren’s plan would be funded by a 2% ultra-millionaire tax.
According to latest student loan debt statistics, there are more than 44 million borrowers who owe $1.6 trillion in student debt. According to personal finance site Make Lemonade, student loan debt is now the second highest form of consumer debt, just behind mortgages.
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