Senator Elizabeth Warren, a Democrat from Massachusetts and 2020 presidential hopeful, recently debuted an incredibly comprehensive and innovative approach to canceling (or at least, reducing) student loan debt. Given that 44.7 million Americans have a collective $1.56 trillion in student debt, averaging to about $37,000 per person, Warren’s debt reduction proposal could literally change the lives of countless people.
You might be wondering: Just how much can people save? That answer depends on your student loan debt amount and your income. Luckily, the senator has a calculator right on her website.
Warren first promoted the online calculator when speaking at Iowa State University on Friday. She encouraged people to take out their phones right then and there and use the tool on her campaign’s website.
"Anybody in here have student loan debt? Anybody in here know someone with student loan debt? Okay, I think we got almost everybody," Warren said to the crowd.
The calculator is pretty intuitive, but for the sake of clarity, I included screenshots of what it looks like, step-by-step. I did not use my personal information, but instead student debt averages. In this case, I used an average of $37,000 in student loan debt and the average income of $40,000. For the $40,000 average, I pulled from the Bureau of Labor Statistics and looked at the average salary of people between 25 and 34, as of 2017 reporting.
Here’s what it looks like from the start.
I selected “yes,” which brought me to this screen:
I did a few variations of this answer, but for these screenshots, selected both “4-year college” and “graduate/professional school,” which brought me to this:
As you can see above, I used the $40,000 income.
And the $37,000…. Which brought us to the final calculation…
In this case, I’d be debt-free! Amazing.
The formula does vary depending on your specific information, which is why the calculator is so useful. For example, in households where you earn less $100,000 a year, Warren’s plan cancels up to $50,000 in student debt. As your income level increases, the relief gets a little lower. Think of it as a sliding scale for debt relief. Once you reach $250,000, you’re not eligible for debt relief in the current program.
An important disclaimer here is that these numbers paint a pretty mild picture. Many people have student debt that is way, way beyond $37,000… While many people have incomes way lower than $40,000. Income doesn’t always paint a full picture either, when you consider the cost of health insurance, how many freelancers or part-time workers have inconsistent pay, high cost of living in some areas, and so on.
Reducing (or eliminating) student debt not only gives people more spending power, that they could put back into the market via buying a home or spending at local businesses, but it also relieves stress and pressure. For example, imagine not feeling guilty because you pursued one degree over another? Imagine the relief someone may feel knowing that they can invest or build an emergency fund, instead of paying off a ballooning interest rate?
Eliminating student debt will certainly help the economy, but it’s also bound to help people’s overall mental health and happiness.
On Friday, Warren noted that the calculator is "a way to make real to people what it means to talk about student loan debt cancellation." This feels really important. Talking about debt is too often uncomfortable. It can be seen as a faux pas, much in the way some people shy away from talking about salaries or inherited wealth. Warren encouraging people to look at their debt and financial future in real time not only demonstrates exactly what her proposal can do but also helps to shatter the stigma that lingers around debt.
In terms of what the debt relief program will “cost” Americans, Warren’s campaign estimates that the debt cancellation would cost about $640 billion, paid for by her proposed wealth tax.