Warren’s Universal Free College Initiative: Finding A Constructive, Pro-Opportunity Approach To The Student Loan Debt Crisis

​Innovation and the entrepreneurial spirit fuel businesses growth, wealth creation, and economic development.  By supporting individuals who can provide these key ingredients, public policymakers can cultivate strong and stable economic growth.  Making it easier for enterprising individuals from all socioeconomic backgrounds to start and maintain businesses is part of the equation.  Another part of the equation is tapping the talents, skills, and intellectual capital of inventive individuals.  Because the educated tend to be a massive and largely under-tapped reservoir of intellectual capital, public policymakers would be wise to focus their attention on the college graduate.  To that end, US Senator and Presidential candidate Elizabeth Warren has released a proposal that would provide relief for nearly 75% of Americans who shoulder the crushing burden of massive student loan debt. 

​The so-called Universal Free College initiative would cancel up to $50,000 worth of student loans for individuals making under $100,0000 a year.  Anyone making between $100,000 and 250,000 a year would see a prorated benefit.  The proposal is estimated to offer 42 million Americans immediate student loan relief.  Totaling almost $1.5 trillion and growing, student loan debt is a crushing burden on the US economy.  Faced with an average monthly payment of around $400, student loan debt is a major weight on the finances of the educated.  It is a burden that deprives college graduates of the income they need to purchase new homes and invest in their future.  It also makes it more difficult for college students to relocate to areas where they can take advantage of higher-paying opportunities.  A high debt load, in general, also makes it difficult for borrowers to obtain the loans needed to start businesses while discouraging the indebted from taking the risks needed to start new businesses and explore new opportunities.  
 
By eliminating the burden of student loan debt on the educated, the US government would make it easier for those who are most likely to prosper to prosper.  Critics argue the Warren proposal is unfair to non-college graduates and does not do enough to make college more accessible, but college graduates are the ones who have proven their ability to achieve success in a collegiate environment.  They are the ones who have demonstrated the skills and knowledge needed to capitalize on a college education.  Unfortunately, there is a very good reason that there is a student loan debt crisis.  It is largely due to the way college is marketed to the masses and the way schools use students to funnel billions of dollars in financial aid every year to support their unsustainable infrastructure.  The Warren proposal will do nothing to address the two issue feeding student loan debt crisis: ballooning college costs and insufficient gains in income.  
 
By offering a benefit to those who complete their education, instead of anyone who wishes to attend college, public policymakers will make it easier for those who complete their education to find much needed financial relief without feeding the higher education beast.  Although the estimated $1.1 trillion benefit to the economy over the next decade will almost cover the $1.25 trillion price tag, Warren plans to pay for the program and others by taxing the rich.  Warren wants to impose a 2% tax on individuals with more than $50 million in wealth and a 3% tax on individuals with more than $1 billion in wealth.  Making it easier for Americans to access the opportunities education can provide and making education less of a financial burden will certainly resonate among average Americans whose lives might be radically different due to their ability to afford college.
 
Taxing the rich more is certainly a popular position.  Warren’s proposal is, therefore, likely to help boost her standing in the 2020 Presidential Election, but the popularity of her initiative does not necessarily make her approach good policy.  Directly taxing the rich to pay for a program that benefits the poor and Middle Class is an example of government manually redistributing wealth.  It is an example of unnecessary class warfare.  It is also an example of government failing to address the fundamental problems with the mechanisms of the economy that further enrich the already rich and impoverish the already poor.  Education opens doors.  Making education more affordable for more people and less of a burden for the educated, therefore, helps more people capitalize on the benefits of an education, which helps the overall economy.  To blunt the rising cost of education and the growing burden of student loan debt, however, it is not enough to simply find ways to subsidize the cost of education.
 
The Warren proposal is asking government to take the burden of education off the shoulders of individuals.  It does this, or least part of the proposal does this, by directly easing the burden on the educated instead of simply subsidizing academic institutions.  Unfortunately, it demands the rich directly pay for the benefit, which means the rich will be subsidizing the cost of education instead of those who obtain their education.  Another useful approach would be to ask businesses to help their employees with the cost of education, which would help employers learn to value education more and utilize it more.  At the very least, there is likely a smarter and less confrontational approach to paying for the Warren initiative than arbitrarily targeting those who have more money.  Equalizing the business tax with personal income taxes while instituting a more progressive tax code, which taxes capital gains at the same rate as earned income, would also be a less confrontational approach that would actually help address income inequality.