Sanders announces plan to cancel all student loan debt

Senator Bernie Sanders (I-Vt.) this week proposed legislation that would cancel all $1.6 trillion in federal and private student loan debt held in the United States. Sanders announced the plan—and companion legislation in the House—alongside Rep. Ilhan Omar (D-Minn.), Rep. Pramila Jayapal (D-Wash.), and Rep. Alexandria Ocasio-Cortez (D-N.Y.).

In addition to erasing 45 million Americans’ student loan debt, the proposal would eliminate tuition and fees at public four-year institutions and community colleges, an idea first championed by Sanders during his 2016 presidential campaign. The legislation also calls for:

  • Canceling tuition at trade schools and apprenticeship programs
  • Capping student loan interest rates
  • Expanding Pell grants to cover non-tuition costs such as housing and books
  • Channeling $1.3 billion a year to historically Black colleges and universities, tribal colleges, other minority-serving institutions, and private nonprofit institutions where more than 35 percent of students hail from low-income households
  • Tripling the Work-Study Program

Taxing Wall Street to cover the $2.2 trillion cost

According to Sanders, the higher ed plan would cost approximately $2.2 trillion over 10 years, which he proposes to raise through taxes on Wall Street transactions, including a 0.5 percent fee on stock trades, a 0.1 percent fee on bonds, and a $0.005 percent fee on derivatives.

The new bill also hinges on federal-state collaboration, Vox reports. The legislation would require states and tribes seeking federal higher education aid to enter into an annual agreement with the Department of Education. Among other commitments, states would pledge to eliminate tuition and fees and reduce their reliance on adjunct faculty.

Sparking debate over universality vs. targeted intervention

While noting that the proposed legislation is unlikely to make it out of the Republican-controlled Senate, The Chronicle of Higher Education says the idea of complete, rapid student loan debt cancelation differentiates Sanders from other Democratic presidential contenders. Senator Elizabeth Warren (D-Mass.) in April proposed a $1.25 trillion college-affordability plan that would eliminate student loan debt for more than 75 percent of borrowers, make two- and four-year public colleges tuition-free, and target aid to minority-serving institutions.

Proponents of Sanders’s more sweeping plan have lauded its simplicity and expansiveness, citing economists’ warnings that student loan debt is hampering everything from small business creation to family formation, retirement savings, homebuying, and job selection. Some critics, however, have said it’s a costly answer to just a slice of the many challenges driving educational inequities and that it isn’t targeted enough. “There’s a piece of me that has seen how widespread the pain is, including among people you might say are financially fine,” Temple University Professor Sara Goldrick-Rab told The Washington Post. “But there’s a piece of me that knows what the pot looks like, and says, ‘That’s not the best use of the money.’”

Even plans like Warren’s means-tested debt-cancelation proposal have prompted critiques that such solutions are not “progressive” and would benefit relatively affluent families. Others, including Sanders, say that’s not the point—the goal is to make “a full and complete education a human right in America, to which all of our people are entitled.”

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