He used to work for U.S. Secretary of Education Betsy DeVos. Now, he wants to cancel your student loan debt.
Here’s what you need to know.
Student Loan Debt Forgiveness
A. Wayne Johnson was a senior Education Department official who was hired to help manage the Office of Federal Student Aid, which oversees about $1.5 trillion of federal student loan debt. Two years later, Johnson said the federal government should not lend student loans, and believes that most federal student loan debt will not be repaid.
Johnson, who is now a candidate for the U.S. Senate in Georgia, has proposed a new student loan forgiveness plan:
- Forgive up to $50,000 of federal student loans for any borrower
- Provide a tax credit for up to $50,000 for people who already repaid student loan debt.
- Provide a $50,000 government voucher, which would not require repayment, for new student loan borrowers to cover four years of tuition at college or graduate school.
- Institute a 1% tax on corporate earnings to fund the proposal
Johnson believes that $925 billion of student loan debt can be forgiven under his student loan forgiveness plan, which he says would cancel student loan debt entirely for about 37 million borrowers. Johnson’s does not offer student loan forgiveness for private student loans. However, Johnson is open to the idea of income share agreements (ISAs), which enables students to pay an investor a fixed percentage of their income in exchange for the investor funding their education.
DeVos recently appeared on Special Report with Brett Baier on Fox News, and shared her opinions on the notion of cancelling student loan debt, which has been proposed by several Democratic presidential candidates, including Sen. Bernie Sanders (I-VT) and Sen. Elizabeth Warren (D-MA).
“Their proposals are crazy," DeVos said. “Who do they think is actually going to pay for these? It's going to be two of the three Americans that aren't going to college paying for the one out of three that do.”
Bernie Sanders: Cancel All Student Loan Debt
Sanders has offered the most ambitious plan yet to address the nation's student loan debt. Simply put, Sanders' plan would cancel all $1.6 trillion of federal and private student loan debt. There is no eligibility criteria; everyone qualifies. Sanders will fund his student loan forgiveness plan through a new tax on financial transactions, which he expects could raise more than $2 trillion over the next 10 years.
Elizabeth Warren: Cancel 95% Of Student Loan Debt
Johnson’s plan would cancel more student loan debt than Warren’s. Warren’s plan would cancel student loan debt for more than 95% of borrowers, and would entirely cancel student loan debt for more than 75% of Americans with student loan debt. Warren's plan would cancel $50,000 in student loan debt for every person with household income under $100,000.
Her plan also provides substantial debt cancellation for every person with household income between $100,000 and $250,000. Importantly, Warren's plan offers no student loan debt cancellation to borrowers with a household income above $250,000, which she says is the top 5% of earners. Warren's plan would be funded with a 2% Ultra-Millionaire Tax.
According to the latest student loan debt statistics, there are more than 44 million borrowers who owe $1.6 trillion in student loan debt. According to personal finance site Make Lemonade, student loan debt is now the second highest form of consumer debt, second only to mortgages.
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