Sen. Elizabeth Warren has been pushing for student loan relief for years
A MARTINEZ, HOST:
Now let's hear from some students who could be affected directly by the Biden plan.
ASHANTI JEAN-CLAUDE: Ten thousand dollars - to not have to pay that and put it towards my family back at home - that would be awesome. My parents have worked real hard to put me through college. I have 10 siblings. So it would mean a lot.
MYKALA ELDER: So I certainly think that it's something great. It'll help me personally and help my little sister. At this point, I just feel like, you know, it's good to kind of take what we can get. Unfortunately, I am planning on going to law school, which will put me even more into debt.
LUKE WINNOCKE: Still, I'm not sure that the 10K really quite lives up to the expectations of some of those progressives, but it's still a step in the right direction, I think.
MARTINEZ: Those were the voices of Ashanti Jean-Claude (ph), Mykala Elder and Luke Winnocke (ph) from the campuses of Howard University and George Washington University in Washington, D.C.
RACHEL MARTIN, HOST:
Massachusetts Democratic Senator Elizabeth Warren is a longtime advocate for student loan debt forgiveness, and she joins us now. Senator, thanks for being on.
ELIZABETH WARREN: Oh, good morning.
MARTIN: You had been pushing legislation that would have eliminated $50,000 in student debt for more than 40 million Americans, including private borrowers. So the Biden plan is less than that. Are you satisfied with what the administration has come up with?
WARREN: I'm celebrating. Look; in the last 24 hours, 20 million Americans learned that they never have to pay another nickel of student loan debt, and 23 million more Americans learned that the amount they owed on their student loans when COVID hit is now substantially reduced. In addition to that, all the parents of high schoolers and people who will be going to school in the future learned that the income-determined repayment plan has changed so that anyone who wants to go to school and isn't in a family that can write a check for that will not have to go through debt hell. And that just means life got better for a whole lot of folks in America's middle class. So yay. Would I like more? You bet I would. Will I keep fighting for it? Of course. But this is huge.
MARTIN: So forgiveness applies to borrowers who earn less than $125,000 a year or households that make less than $250,000. I suppose you have to draw the line somewhere, but do you think this is a fair standard?
WARREN: Yes, I think that - I get it. The president was absolutely locked in that he wanted an income cap in order to concentrate resources for those who need it most. But the part to remember here is that more than half of all the recipients will get $20,000 in student loans cancellation.
MARTIN: These are students who received Pell Grants.
WARREN: And that's more than half of all the people who have student loans. And what that does is that concentrates the relief among African Americans, among Latinos, among veterans, among mamas and daddies who decided to go back to school and among first-generation college students. Remember that Pell Grants are given - 95% of the families have incomes less than $60,000. So there's a big push in this to get help to the people who need it most.
MARTIN: Former Treasury secretary under President Obama, Larry Summers, criticized the administration's forgiveness plans, saying it's going to make inflation worse. Do you agree?
WARREN: No. And in fact, the data just don't back that up. Even the most conservative outlets that have looked at this have said maybe it'll have a tiny little effect on inflation. But here's the thing - they forget the other half. The president has paired cancellation of student loan debt with the resumption of payments for the 23 million Americans who will still owe student loan debt. So that is - that means that for 23 million Americans, there's going to be a new payment starting, which has a deflationary effect, not an inflationary effect.
MARTIN: May I ask what you think of Larry Summers' alternative? He thinks that these loans should be discharged by filing for bankruptcy. You happen to have a lot of experience in bankruptcy law.
WARREN: You know, first of all, you'd have to change the bankruptcy laws. One of the reasons that we have created this horrible situation with debt is that the bankruptcy laws were changed years ago to make it virtually impossible to discharge debts in bankruptcy. But the second is to say that is - you have to think of it as, that's a hand-tailored response. People go into bankruptcy, and it is a very complex and pretty expensive process. It's not designed to handle 43 million Americans.
The president is making this change both to help middle-class families, working-class families and, frankly, to help our whole economy. Understand that the people who have student loan debt - remember, 40% of them don't even have a college diploma. But these are people who are struggling with debt, and we know as a group they are less likely right now to move out of mom's basement, to be able to save up money to buy a home, to be able to start their own small business or even to start a family. And that has an impact on our whole economy.
MARTIN: So does the overall cost of college. And we have to address this.
WARREN: Yes. You bet.
MARTIN: The administration's plan for loan forgiveness does not do anything about the skyrocketing cost of college tuition. I mean, it's gone up on average 9%. I mean, that's an annual average increase. What is the administration planning to do? What are you pushing them to do?
WARREN: You preach to the choir on this. I have been arguing also for years that we need to get the cost of college under control. Let me mention a couple of things really quickly. I have gotten legislation that's partway through Congress - not all the way there yet - that would cause - we'd have more transparency. So schools would be required to disclose not just the so-called sticker price in their scholarships but, in fact, how many people graduate, how long it takes them to graduate, which affects the price, and how much they make when they get out on the other side.
We also, though, need more public support for our public colleges and universities to bring down the tuition cost, and we need to force colleges to have skin in the game to keep their costs down. So there's a lot of work still to be done. That's on Congress, and I'm leading that fight.
MARTIN: Senator Elizabeth Warren, thank you for your time this morning. We appreciate it.
WARREN: Thank you.
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