Last week, two days before the first debate of the 2020 Democratic presidential primary race, Sen. Bernie Sanders announced his plans to scrap the student debt of 45 million Americans—a debt that sits at nearly 1.6 trillion dollars—and transform the U.S.’s post-secondary education system.
Sanders introduced this new plan with representatives Ilhan Omar, D-Minn., and Pramila Jarapal, D-Wash. If enacted, this legislation would cap student loan rates while also erasing debt and tuition fees from all two- and four-year public colleges and universities, as well as trade schools and apprenticeship programs. It would also allocate more funding to minority institutions and expand Pell grants by allowing students to use them to pay for other aspects of student life like housing and transportation.
The Democratic presidential candidate’s new legislation has been titled “The College for All Act” and involves paying back these debts through new taxes that would be placed on Wall Street financial transactions.
For this plan that is projected to cost $2.2 trillion, Sanders’ team says that taxes like 0.5% on stock transactions and 0.1% on taxable bonds would raise up to $2.4 trillion in the next ten years.
Student debt is an all-too-common occurrence and strain on many Americans. In 2001, tuition for a four-year program at a public college cost around $3,600—in 2019, it costs around $10,000. Meanwhile, in the same period of time, the minimum wage has only increased by $2.
So, it may not be surprising that now the average graduate finishes their degree $30,000 in debt. Most students are also unable to repay those debts quickly after college, which has resulted in 28% of people who take out student loans being in delinquency or default.
Sanders’ plan is the most aggressive and comprehensive of any plan detailed in the 2020 Democratic presidential primary. Sen. Elizabeth Warren’s proposal of paying $640 billion into student debt forgiveness does not approach Sanders’ legislation. It would only offer $50,000 for people with an annual income of less than $100,000, and less for those who make more until it is capped at $250,000. Secretary Julian Castro plan is even less giving, offering only partial loan forgiveness to people who receive public assistance benefits.
Some criticize Sanders’ plan saying that forgiving everyone of their debt unfairly advantages the wrong groups. People in the upper-middle-class and higher make up one-third of the people holding student debt, and it is believed they should be able to repay their debts on their own. This has led to some democrats criticizing these loan forgiveness plans as they do not help the intended lower-income groups as much as they help higher-income groups stay on top.
Republicans say that loan forgiveness is too expensive to enact and that it is unfair to people who have already repaid their student debts.
Should this legislation be enacted, students of public colleges would have their overdue fees wiped within six months. It would take slightly longer for those who attended private school.