Rick Bowmer, Associated Press
Democratic presidential candidate Sen. Elizabeth Warren, D-Mass., speaks during an campaign rally Wednesday, April 17, 2019, in Salt Lake City.

SALT LAKE CITY — Calling her plan "transformational," Massachusetts Sen. Elizabeth Warren said she wants to cancel up to $50,000 per person in student loan debt for 45 million Americans by taxing “ultra-millionaires” two cents on the dollar.

Warren's proposal, which she described April 22 on the website Medium in advance of a CNN town hall at a New Hampshire college, was quickly criticized by analysts dismayed by the cost and the additional tax on those who have $50 million or more.

But beyond the usual partisan divide that emerges when new government spending is proposed, there was also a swift backlash over an ethical issue: whether it’s right to erase a debt someone promised to pay by shifting the cost to other people.

Writing in the Washington Examiner, Philip Klein called the proposal a "slap in the face" to everyone who has worked hard to pay for their tuition or loans.

On Twitter, Charlie Camosy, an associate professor of ethics at Fordham University, asked why loans he took on to get a master's degree should be canceled when he could have worked a part-time job instead of borrowing money.

Others argued that debt forgiveness should require something of the person being forgiven.

New York Times columnist Ross Douthat said a Republican counterproposal should be to forgive the debt of anyone who has two or more children, and later added that seminarians and divinity school students should have their debt forgiven after they are ordained.

Warren and others who support student-loan forgiveness say a big solution is needed for a big problem. Writing in Medium, Warren, who is 69, said she was able to pay tuition at the University of Houston with money she earned working part-time as a waitress. Tuition then was $50 a semester.

Now, the average cost of tuition and fees for a year ranges from $9,716 at an in-state public college to $35,676 at a private university, according to U.S. News & World Report.

Graduates in 2017 owed an average of $28,650, Forbes magazine reported. Forgiving much of that debt would be a "game-changer," Meagan Day wrote in Jacobin magazine. "It takes the problem seriously and proposes to do something concrete about it."

Americans already have a mechanism for student loan forgiveness; the problem is, hardly anyone qualifies for it.

Established in 2007, the Public Service Loan Forgiveness Program allows people with certain types of federal loans to apply for cancellation of the debt after they've made 120 consecutive payments while working full-time in a a public-service profession, such as the military, law enforcement, public education and public health.

According to NPR, however, 99 percent of applicants are turned down.

Meanwhile, the amount of student loan debt owed by Americans now tops $1.5 trillion, and it's not just owed by the students themselves, but also by parents and grandparents who took out loans on the students' behalf. The number of adults 60 and older with student loan debt is double what it was a decade ago, according to the most recent figures from the Federal Reserve.

"Student loan debt is now the second highest consumer debt category — behind only mortgage debt — and higher than both credit cards and auto loans," senior contributor Zack Friedman wrote for Forbes.

That's one reason Warren and other Democrats who hope to become their party's nominee for the 2020 presidential election see this as a pivotal issue of the upcoming campaign.

Debt and no degree

The state with the highest average amount of student loan debt is Connecticut, with an average debt load of $38,510. The lowest is Utah, where the average is $18,838.

More than 2.5 million of the nation's borrowers owe more than $100,000.

According to Forbes, slightly more than 11 percent of Americans with student loans are in default, and filing bankruptcy won't help, because unlike other types of debt, student loans can't be dismissed except in the case of "undue hardship."

Worse, many of the people saddled with college debt don't have degrees. About 60 percent of people who enroll at a four-year college or university graduate, according to the National Center for Education Statistics. The graduation rate drops to 26 percent for students at private, for-profit institutions.

And people who did not complete their education are the most likely to be behind on payments, according to the Federal Reserve. One-third of borrowers who did not obtain an associate degree are delinquent, compared to one-quarter of borrowers with an associate degree. And the delinquency rate drops to 11 percent among people who have earned a bachelor's degree and 5 percent among people who have earned a graduate degree.

Graduation rates are one reason the government's liberal issuance of loans to teens and young adults troubles talk-show host and author Dave Ramsey.

" Student loan debt is now the second highest consumer debt category — behind only mortgage debt — and higher than both credit cards and auto loans. "
Senior contributor Zack Friedman wrote for Forbes

"Maybe the federally insured student loan program is a really stupid idea. Loaning 17-year-olds money, 50 percent of which are going to fail at their goal. Wow. Something to think about, America," Ramsey said on his show while talking with an attorney who, along with her husband, has about $400,000 in student loans that they're trying to pay off.

The attorney who spoke to Ramsey would only have about a quarter of her student loans canceled under Warren's plan, which maxes out at $50,000 and is incrementally reduced according to the income the debtor earns. Warren estimates that 75 percent of Americans with student-loan debt would have it forgiven completely, which she says will benefit the American economy and boost rates of home ownership.

People wouldn't have to apply to have their debt forgiven; for most people, it would be done automatically since the government already has information about income and student debt levels, Warren wrote.

For people who earn between $100,000 and $250,000, the amount canceled would be reduced by $1 for every $3 in income; for example, a person with household income of $130,000 would have $40,000 forgiven.

People who earn more than $250,000 would not qualify for debt forgiveness.

The idea of reducing the benefit by income, however, did not please everyone, especially since people earning $160,000 — more than twice the average income of Americans – would see their debt reduced by $30,000.

And it's unclear whether people who used credit cards or took out a personal loan to pay tuition would qualify for money to repay those debts.

Other options

Despite concerns that forgiving debt disproportionally rewards some people while giving nothing to people who have already paid for their tuition, some people defend loan forgiveness, arguing that it's necessary to counter a bloated system plagued by inflated tuition and predatory lending.

One example of that was in 2015, when the Consumer Financial Protection Bureau sued Corinthian College for defrauding students and charging interest as high as 15 percent for tuition and fees that ran as high as $75,000.

Some people on Twitter have suggested that, instead of forgiving all student loan debt, an alternative would be to cancel the interest and have students pay back the only the principal. Others have suggested that to be fair, people who have already paid off their loans should get a tax credit or another type of reward.

But some people have likened the situation to biblical parables, such as that of the prodigal son and the vineyard workers in the 20th chapter of Matthew, who each agreed to a wage before some got upset when they learned that others ended up with a better deal.

Others noted that health insurance helps some people while others never need it.

"Is health insurance fair to the people who are never sick or injured? 2% of health insurance customers are responsible for 40% of medical costs," wrote Sean P.C. McAvoy, who later argued on Twitter that higher education should be free "or as low cost as possible" for everyone, which is another component of Warren's plan. (Warren also wants an expansion of Pell Grants, more aid for historically black schools, and the elimination of tuition and fees at public colleges and universities.)

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Regardless of how Warren's proposal plays out as the 2020 campaign gathers steam, Katherine Timph, writing in National Review Online, said there's a less-talked-about solution that students should know and parents should teach: Don't take out loans, of any kind, that you can't afford.

Timph wrote that she had been accepted into graduate school at Columbia University and was thrilled, until she realized she would have to take out $80,000 in loans to cover tuition. She decided that that, as much as she wanted to go to Columbia, she wasn't willing to take on that debt. "As hard as it was, though, it was also the smartest decision that I ever made," she wrote.