Sanders proposes bill to write off all student loan debt
Challengers for the Democratic Party nomination for the United States presidential election differed last week over strategies to tackle student affordability and the US$1.6 trillion outstanding student loan debt.
Senator Bernie Sanders, from the left of the party, stole the headlines by advocating a complete write-off of all outstanding student loan debt, in advance of two candidates’ debates on Wednesday and Thursday, which saw candidates offer a range of alternative solutions.
Sanders (who sits as an Independent representing Vermont) and Representative Ilhan Omar (Minnesota) on Monday proposed legislation that would cancel all federal and private student loan debt, covering 45 million Americans, within six months.
The proposal would wipe out tuition and other fees at public four-year colleges and universities, as well as community colleges, and is the most radical college affordability plan put forward so far.
Sanders described his own proposal as “truly revolutionary”.
He said that for a generation hard hit by the Wall Street crash of 2008, “it forgives all student debt and ends the absurdity of sentencing an entire generation to a lifetime of debt for the ‘crime’ of getting a college education”.
Sanders’ bill would also cap student interest rates at the same level as the federal government pays for its debt.
There would also be US$1.3 billion a year to reduce or remove tuition and other fees for disadvantaged students at private non-profit historically black colleges and universities.
Critics say allowing wealthy students to enjoy free tuition and fee-free education at public universities at the expense of the taxpayer benefits wealthier students the most because they go on to take further degrees in disproportionate numbers – and that targeted support for disadvantaged students makes more sense.
They also argue that it is unfair on those who have worked hard to pay off their loans already.
But advocates of free tuition point out that student debt disproportionately burdens students of colour and raises dropout rates.
An open letter signed by 100 academics, including the economist Jeffrey Sachs of Columbia University and leading African American scholars Darrick Hamilton of Ohio State University and Sandy Darity of Duke University, supports Sanders’ plan, Prospect reported.
They say the rising cost of higher education has far outstripped the cost of living and has priced many prospective students out of higher education while burdening 45 million others with heavy debt from the start of their careers.
“In the face of this crisis, nothing short of a complete overhaul of our public higher education system will suffice,” they say.
Sanders’ plan outflanks that of Senator Elizabeth Warren on the progressive wing of the party. Warren, a former academic who taught law at Harvard University and represents Massachusetts, is seeking to provide at least some debt cancellation for 95% of people with student loan debt, but complete student debt cancellation for more than 75%.
Her US$1.25 trillion plan would forgive US$50,000 in student loan debt for every person with a household income of US$100,000 or less, and forgive a portion of student debt to those on higher incomes of US$100,000 to US$250,000.
In April she pledged to combine debt cancellation with measures to ensure that “nothing like this ever happens again”.
“We need to fundamentally change the broken system that created the crisis in the first place,” she said.
“That’s why I’m proposing a historic new federal investment in public higher education that will eliminate the cost of tuition and fees at every public two-year and four-year college in America.”
Sanders intends to fund the cancellation of student loan debt via a tax on the trade of stocks, bonds and derivatives.
“In 2008, the American people bailed out Wall Street,” Sanders said. “Now, it is Wall Street’s turn to help the middle class and working class of this country.”
Warren is expected to release her own college debt plan legislation in the next few weeks but has proposed paying for her plan via a 2% asset tax on the country’s 75,000 wealthiest families.
More targeted measures
Other candidates are seeking more targeted measures to make higher education affordable. A number of them support measures to enable students to refinance loans.
Pete Buttigieg, mayor of South Bend, Indiana, advocates doubling the size of the Pell Grant for economically disadvantaged students and making tuition affordable for all and completely free for those from households on lower incomes.
Senator Amy Klobuchar (Minnesota) supports a maximum Pell Grant of US$12,000 a year, free community college and capping student loan interest rates.
Julián Castro, the housing secretary under former president Barack Obama, who performed well in Wednesday’s candidates’ debate, wants to cancel student debt for lower income borrowers.
But front runner, former vice president Joe Biden, while supporting free community college, proposes debt relief targeted only at borrowers earning less than US$25,000 a year.
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