Scott Olson | Getty Images News | Getty Images
Democratic presidential candidate Elizabeth Warren lashed out at billionaire Leon Cooperman on Monday for his stake in student loan servicer Navient and stressed the importance of forgiving student debt.
“I care about an entire generation of students being crushed by student loan debt — deferring their American dream because they can’t afford it,” Warren, the senior senator for Massachusetts, wrote in a Tweet. “I’m not afraid to stand up to the wealthy and well-connected.”
Navient is being sued by several states for misleading borrowers. An audit by the U.S. Department of Education last year suggested the company uses deceptive practices.
Outstanding education debt has outpaced credit card and auto debt, and the average college graduate leaves school $30,000 in the red today, up from $10,000 in the 1990s. Default rates are on the rise, and a senior student loan official recently resigned from the Trump administration, calling its lending system “predatory” and “unsustainable.”
Warren plans to pay for her student debt forgiveness plan with a 2% annual levy on accumulations of wealth exceeding $50 million, and an additional 1% tax on wealth over $1 billion.
Hedge-fund manager Cooperman, chairman and CEO of New York-based investment advisory firm Omega Advisors, criticized Warren on Monday for what he describes as her “vilification of billionaires.”
“The world is a substantially better place because of Bill Gates, Michael Bloomberg, David Rubenstein, Bernie Marcus, Ken Langone,” Cooperman said on CNBC’s “Halftime Report.”
Cooperman went on to describe Warren’s plans as “idiocy,” and said they try to turn people’s heads “by promising a lot of free stuff.”
There are other signs that Warren could face an uphill battle in how she plans to pay for student debt forgiveness.
More from Personal Finance:
Former Trump official says student debt should be cancelled
What to do if denied public service loan forgiveness
Big changes in works for student loan borrowers
Nearly 60% of Americans support a proposal in which borrowers who earn less than $250,000 get $50,000 of their student debt cancelled, according to a Quinnipiac University poll in April. Yet that backing drops to 44% if such a plan were funded through a tax on the wealthy.
Warren suggested that Cooperman was criticizing her to protect his own self interests.
“One thing I know he cares about — his fortune,” Warren wrote in a Tweet on Tuesday. “He’s a shareholder in Navient, a student loan company that has cheated borrowers and used abusive, misleading tactics.”
Warren has been a prominent critic of Navient, one of the largest student loan servicers in the country. She said Cooperman “went so far as to ask how I might impact his investment in the last earnings call with Navient.”
To that end, Mark Kantrowitz, a higher education expert, said, “If there’s widespread student loan forgiveness, student loan servicers and lenders would take a big hit.”