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Elizabeth Warren has pledged to cancel student loan debt on her first day in office

Elizabeth Warren has pledged to cancel student loan debt on her first day in office
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Democrat Presidential candidate Elizabeth Warren has pledged to forgive student loan debt on her first day in office. In an announcement (opens in new tab) made on Tuesday, Senator Warren said she would implement a "student loan debt cancellation plan that offers relief to 42 million Americans", without having to go through Congress. With just weeks left before voting begins in the first primary and caucus states, this controversial pitch targets young voters, many of whom are steeped in student debt. 

The latest statistics (opens in new tab) for student debt found that there is currently over $1.5 trillion owed by a collective 45 million borrowers still outstanding, and this has steadily been increasing over the last 15 years.

On average, borrowers in the class of 2017 owe $28,650. However, Warren has pledged to cancel up to $50,000 of debt per person in a bid to target what she calls a "squeeze" on "hard-working middle-class families", many of whom turn to the best debt consolidation companies (opens in new tab) to manage their borrowing each month.

Perhaps the most controversial aspect of this policy rollout is Senator Warren's plan to enact it without going through Congress. Claiming that "we can’t afford to wait for Congress to act", Warren instead plans to implement her debt cancellation plan through the Department of Education, directing the Secretary for Education to crack down on the for-profit college education industry. 

How would Warren pay for this?

This ambitious proposal would cost an estimated $640 billion (opens in new tab), the sum of which Warren intends to offset by introducing a 2% 'ultra-millionaire (opens in new tab)' tax on households with more than $50 million in net worth. 

The policy rollout would be staggered according to household income, with the top 5%, who earn more than $250,000, continuing to pay full student loan repayments. Warren also plans to 'phase out' the maximum $50,000 cancellation by $1 for every $3 in income above $100,000, meaning that those earning $130,000 would have $40,000 written off.

What does this mean for me?

If we learned anything in 2016, it's that elections can be close-fought and hard to call. According to a survey from a Quinnipiac University poll (opens in new tab) released on Monday, Former Vice President Joe Biden is the favorite Democratic candidate, winning the support of 25% of Democrats and Democrat-leaning independents. Warren takes third place with 16%, behind Senator Bernie Sanders' 19%. 

This might well mean that we never seen Senator Warren's student loan debt cancellation plan put to voters. We know college can be expensive, so we've reviewed the best private student loan companies of 2020 for those who don't have the funds to pay for schooling and who've exhausted their federal student loan options (opens in new tab)

And if debt is a serious issue for you, we have advice on the best debt settlement companies (opens in new tab) available in 2020.

Millie is a former staff writer for the Top Ten Reviews brand who now works across Future's Home portfolio. Her spare time is spent traveling, cooking, playing guitar and she's currently learning how to knit. Millie loves tracking down a good deal and keeping up-to-date on the newest technology and kitchen appliances.