Sen. Bernie Sanders (I-VT) Photo credit: ASSOCIATED PRESS
Bernie Sanders will announce a plan today to cancel all $1.6 trillion of U.S. student loan debt.
Here’s what you need to know.
Student Loan Debt Forgiveness
Sanders, a U.S. Senator from Vermont and 2020 presidential candidate, will offer legislation today that is the most ambitious plan yet to address the nation’s student loan debt. As first reported by the Washington Post, Sanders’ plan will have no eligibility criteria and will be available to the nation’s approximately 45 million student loan borrowers of both federal student loans and private student loans.
Sanders will announce the legislation with colleagues in the House of Representatives, including Representative Ilhan Omar (D-MN) and Representative Pramila Jayapal (D-WA).
During his 2016 presidential campaign, Sanders proposed to make college tuition-free and debt-free. In 2016, he introduced legislation – the College For All Act – that would make public colleges tuition-free for students.
Sanders believes that:
- Four-year public colleges and community colleges should be free – including tuition and fees – for everyone.
- Federal student loan interest rates should be lower, and the federal government should not make a profit on student loans.
- Student loan refinancing should be revamped to help save money for more borrowers.
Student Loan Debt Forgiveness: Who Pays
Sanders will fund his student loan forgiveness plan through a new tax on financial transactions, which he expects could raise more than $2 trillion over the next 10 years. The tax plan will include a 0.5% fee on all stock trades, a 0.1% fee on all bond trades and a 0.005% fee on all derivatives trades.
Comparison To Elizabeth Warren Student Loan Debt Plan
Senator Elizabeth Warren (D-MA) introduced legislation earlier this month to cancel student loan debt for more than 95% of borrowers, and would entirely cancel student loan debt for more than 75% of Americans with student loan debt. Warren believes that her plan would reduce the wealth gap in America and provide an economic stimulus to the middle class to increase home purchases and help start small businesses.
While the Sanders plan would cancel more student loan debt than Warren’s legislative proposal, Warren’s plan would:
- Cancel $50,000 in student loan debt for every person with household income under $100,000.
- Provide substantial debt cancellation for every person with household income between $100,000 and $250,000.
- Not tax as income student loan debt that has been cancelled.
- Also make private student loan debt eligible for cancellation.
- Streamline the student loan debt forgiveness process using data and income information already available to the federal government.
Importantly, Warren’s plan offers no student loan debt cancellation to borrowers with a household income above $250,000, which she says is the top 5% of earners. There would also be “phase-outs” based on income. The $50,000 cancellation amount would phase out by $1 for every $3 in income above $100,000. According to Warren, for example, “a person with household income of $130,000 gets $40,000 in cancellation, while a person with household income of $160,000 gets $30,000 in cancellation.”
Warren’s campaign proposal included an Ultra-Millionaire Tax that would include a 2% annual tax on the 75,000 families in the U.S. who have at least $50 million in net worth. However, Warren has not indicated whether the legislative proposal would be funded in the same manner.
Student Loans: 2020 Presidential Candidates
Some of the 2020 presidential candidates have weighed in on the future of higher education, how to manage growing student loan debt, and how to pay off student loans faster. Candidates including President Donald Trump, U.S. Senator Bernie Sanders (I-VT), Mayor Pete Buttigieg (D-IN), U.S. Senator Kamala Harris (D-CA), U.S. Senator Kirsten Gillibrand (D-NY) and others have proposed everything from tuition-free college to student loan debt forgiveness to student loan refinancing and public service loan forgiveness.
