Democratic 2020 candidate Sen. Elizabeth Warren on Tuesday disclosed the details of her promise to cancel approximately $640 billion of student loan debt, targeted at lower and middle-income earners.
Warren’s measure follows a competing bill released earlier this year by her presidential campaign opponent, Sen. Bernie Sanders (I-Vt.). His plan would go further in eliminating all outstanding student loan debt, regardless of a borrower’s income.
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Warren (Mass.) is introducing the bill — dubbed The Student Loan Debt Relief Act — along with Rep. Jim Clyburn, (S.C.), the No. 3 House Democrat, who will sponsor a companion measure in that chamber.
The legislation calls for automatically canceling most student loans without requiring borrowers to submit applications. The government would use existing income and debt information to determine who qualifies.
Private student loan borrowers would be eligible for debt relief under the bill by refinancing their private debt into federal student loans. The bill also calls for lowering the interest rate on all existing federal student loans.
Under the plan, the federal government would suspend the collection of student loan payments for a year while the Education Department carries out the loan forgiveness program.
Sanders unveiled his legislation last month alongside Reps. Pramila Jayapal (D-Wash.), Ilhan Omar (D-Minn.) and Alexandria Ocasio-Cortez (D-N.Y.), who are among the co-sponsors to a companion measure in the House.
Warren’s bill would also make it easier to discharge both private and federal student loans in bankruptcy. The legislation would undo provisions in the bankruptcy code that prohibit the discharge of student loans except where debtors present an “undue hardship.”
Warren’s 2020 rival, former Vice President Joe Biden, supported and helped pass those restrictions on discharging student loans in bankruptcy during his time in the Senate. The Obama administration in 2015 recommended that Congress ease the bankruptcy restrictions on private, but not federal, loans.