If Elizabeth Warren wants to solve student loan debt, I have one small way she can contribute to it. She probably won’t like it, though.
If you haven’t been paying attention to the Massachusetts senator’s campaign, you might have missed the fact that she’s made canceling student debt a major part of her platform. She has proposed eliminating up to $50,000 of debt for households earning less than $100,000, on top of a proposal to make all public colleges tuition-free.
She proposes to pay through this through a wealth tax — colloquially referred to by her campaign as an “ultra-millionaire tax” — which would tax households worth more than $50 million at 2 percent per year for every dollar over that amount; households worth more than $1 billion would be taxed at 3 percent marginally for every dollar over that amount.
“For two cents on the dollar, we could pay for universal child care, universal pre-K, universal college and knock back the student loan debt burden for about 43 million Americans and still have nearly, just short, of $1 trillion leftover,” Warren told CNN.
“It tells you how badly out of whack our economy is right now.”
Forget that her numbers on the plan are dodgy or that she’s targeting the group of people who are most easily able to cloak or move their wealth to avoid taxes. When it comes to education, it doesn’t address the root problem: The fact that the cost structure of education is profoundly inflated by treating government and private loans as “free money” without any impetus to restrain the price tag.
Warren has long insisted that the government is partially responsible because it profits off of student loans. Back in 2013, for instance, she called this profit “obscene.”
“Instead of helping our students, the government is making a profit on student loans,” Warren said during a speech before a conference that skewed young, according to the Huffington Post.
“That is wrong. It is morally wrong. That is obscene.
“The government should not be making profits off the backs of our students,” she added. “Period.”
Those students booed at the government profiting off of the loans. If only they knew how the speaker was profiting off of them.
You may recall that Warren was a law professor at Harvard University. You may not recall how well she was remunerated for her work in that position.
“Even though she has outlined a plan for “debt-free college,” Warren made a salary of $430,000 from Harvard,” Lisa Boothe wrote in the Washington Examiner back in 2016.
“Also, according to CNN Money, the vast bulk of her wealth is held in mutual funds with ‘TIAA-CREF, a financial services company that provides retirement services to universities.’ Investing in the fund offers Warren ‘three guarantees: you’ll never lose your principal, you’ll always get a minimum interest rate and you’ll receive a lifetime income stream.'”
Boothe was attacking Warren at the time for fomenting class warfare while simultaneously being extraordinarily wealthy. Beyond that, though, there’s the deeper problem of Warren earning nearly half a million dollars a year from Harvard.
The reason we’re even talking about this is that higher education doesn’t really try to contain costs — or, when they do so, they aren’t all that successful. Between 1985 and 2011, while inflation was a cumulative 114.85 percent, college inflation clocked in at 498.49 percent.
Costs are clearly out of control, which is why it’s arrant hypocrisy to see a candidate who was taking home $430,000 a year from an institution of higher education talking about the “obscenity” of government profiting from student loans. She’s grabbing for cash at the same time she’s condemning cash-grabbers in government.
To be fair, I think a good case could be made that neither is a desirable state of affairs, but it’s not as if the Massachusetts senator has a leg to stand on here.
If Warren was serious about stopping crippling student debt, the first thing she could do is encourage institutions of higher education to contain their costs. Instead, she’s forgiving student debt and instead passing the cost on to “ultra-millionaires” — though good luck extracting everything she needs to pay for her sweeping plan of free stuff. Which means, of course, more free money for universities, which means more tuition hyper-inflation.
It’s like the circle of life, except redesigned to impose crushing burdens on those just starting out in life. If it’s not student debt they’ll be paying for, they’re going to be on the hook for the federal debt. Neither is going to be a palatable option.
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