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Warren urges Biden to cancel student debt: 'Single biggest stimulus we could add'

Sen. Elizabeth WarrenElizabeth WarrenAdams, Garcia lead in NYC mayor's race: poll Exclusive: Democrat exploring 'patriot tax' on multimillionaires' wealth McConnell seeks to divide and conquer Democrats MORE (D-Mass.) on Tuesday urged President-elect Joe BidenJoe BidenFormer Rep. Rohrabacher says he took part in Jan. 6 march to Capitol but did not storm building Saudis picked up drugs in Cairo used to kill Khashoggi: report Biden looking to build momentum for Putin meeting MORE to cancel student debt, calling it the “single biggest stimulus” for the ailing economy, a claim economists dispute.

Speaking at The New York Times's Dealbook Summit, Warren said that student debt cancellation was part of Biden and Vice President-elect Kamala HarrisKamala HarrisHarris highlights COVID-19 vaccination safety, efficacy in SC event to kick off tour Kamala Harris is still not ready for primetime (much less 2024) Lara Trump calls on Americans at border to 'arm up and get guns and be ready' MORE’s election mandate.

“For me it is a mandate to Joe Biden and Kamala Harris to do the things we can do, to cancel student loan debt for tens of millions of Americans, [the] single biggest stimulus we could add to the economy,” she said.

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Senate Minority Leader Charles SchumerChuck SchumerIn Congress, what goes on behind closed doors? Senate Judiciary begins investigation into DOJ lawmaker subpoenas America needs a stable Israeli government MORE (D-N.Y.) said this week that he and Warren have a proposal to cancel $50,000 of debt through executive action.

“We believe that Joe Biden can do that with the pen as opposed to legislation,” he said.

But Biden has yet to endorse that approach. On Monday, he said he favored canceling $10,000 of debt, but cited legislation from House Democrats as the vehicle for advancing the policy. Debt, he said, was a serious problem.

“It’s holding people up. They’re in real trouble. They’re having to make choices between paying their student loan and paying their rent,” he said. 


Some economists, however, are skeptical of claims that student debt cancellation is a highly effective form of stimulus, given that the vast majority of those with student debt are educated and thus have access to better-paying jobs and tend to be higher-earning.

“It’s not a great form of stimulus,” said Adam Looney, an economist at Brookings.

Interventions that target the unemployed and poorer members of society tend to be more stimulative, because lower earners tend to spend the money, juicing the economy, as opposed to saving it up.