Senator Bernie Sanders is famous for his higher education and student debt elimination programs. The self-proclaimed Democratic Socialist candidate ran on a platform of free college in the 2016 campaign against Hillary Clinton. He has returned in the 2020 Democratic primary campaign with similar debt forgiveness strategies.
Sanders has a long history of working in politics. After serving 16 years as Vermont’s only representative in the U.S. House of Representatives, Sanders won the election as a senator in 2006. He has served three terms in that role, even after running a nearly successful primary campaign in 2016.
Prior to serving as a representative, Sanders was the mayor of Burlington, Vermont, improving the city’s progressive taxation programs, affordable housing, child care, women’s rights initiatives, environmental protection, youth programs, and arts programs. As a presidential candidate, his economic proposals are intimately tied into creating greater equality among all races and genders.
The Bernie Sanders 2020 Proposal for College and Student Loans
The Sanders 2020 campaign platform on higher education sums up in a simple objective: Offer free college for all and cancel all student loan debt. Specific proposals include:
- Make public colleges, universities, and trade schools free to all. The cost of attending even a two-year school has skyrocketed in the past few decades, so the Sanders campaign proposes to eliminate all costs to make these programs accessible to everyone regardless of income. Attending higher education was essentially free 50 years ago. Tuition was easy to save for or work to cover, and any debt was simple enough to repay. Making higher education of any form free to all will create a level field.
This requires passing the College for All Act, which proposes $48 billion per year to eliminate tuition and fees at four-year colleges and universities, community colleges, tribal colleges, trade schools, and apprenticeship programs.
- Cancel all existing student debt. Sanders was one of the first lawmakers to draw attention to the huge amount of student loan debt among Americans. Currently, about 45 million people in the United States share about $1.6 trillion in debt from attending postsecondary school. This averages to about $30,000 in debt per adult.
Many policy experts and financial advisers are concerned that this lingering debt prevents economic growth in the U.S. The Sanders campaign proposes to eliminate this debt – not only to spur economic growth but also as a matter of social justice.
The campaign reports that two-thirds of student loan debt is held by women. A third of Hispanic student loan borrowers do not complete their degrees, making debt repayment more difficult, and 35% of Hispanic borrows who took out loans between 2003 and 2004 defaulted on their loans. Black students generally take out more debt but often have a harder time paying this debt off, compared to white graduates, due to institutionalized racism.
According to the campaign, 73% of the benefits from canceling all student loan debt benefit the bottom 80% of Americans – the group making less than $127,000 per year. Unlike the current Internal Revenue Service (IRS) laws, the forgiven loan amounts would not be considered taxable income.
- Make college debt-free for all. Although much of the conversation about college costs revolves around rising tuition and related fees, the cost of living is hard for many students to manage. The Sanders campaign reports that 45% of college students experience hunger, 56% struggle with housing, and 17% experience homelessness.
While many of these students receive Pell Grants to help with the cost of college, those same students take out thousands in student loans to cover living expenses. The lowest-income students graduate with the highest rates of debt compared to their middle-class and upper-income peers.
To eliminate debt for students with the most financial need, the Sanders campaign proposes the following:
- Give Pell Grants to cover non-tuition costs like housing, books, transportation, and other living expenses
- Require participating states and tribes to cover the full cost of obtaining a degree for low-income students, defined as those whose families make less than $25,000 per year
- Cap student loan interest rates going forward, lowering them from 5% to 1.88%
- Match state and tribal spending to reduce the cost for students to attend school so these colleges and universities can hire additional faculty, ensure professional development programs for professors, and increase student access to educational opportunities
- Triple federal work-study funding so more students get important career experience
- Invest in historically black colleges and universities and other minority-serving institutions. Many of the Democratic candidates have a policy to spend more money on improving and expanding historically black colleges and minority-serving institutions. The Sanders campaign proposes to provide $1.3 billion to private, nonprofit minority-serving programs every year, reducing tuition and fees for students while helping these programs expand.
- End equality gaps in higher education attainment. Too many people struggle to get into college or complete their degrees due to both economic gaps and social issues. For example, 1 in 2 people earn a bachelor’s degree by age 24 if their family makes $90,000 or more, while 1 in 17 students whose families make $35,000 or less per year will complete their degree. Over 37% of students without disabilities complete a four-year degree, while only 14.3% of people with disabilities complete similar programs.
Sanders’ presidential campaign proposes important changes to K-12 education to support more students going to college and completing their higher education.
How the Sanders Proposal for Free College and Student Loan Forgiveness Works
As a Democratic Socialist, Bernie Sanders proposes to raise money for his economic proposals, including eliminating student debt and creating free college, by taxing Wall Street. The overall plan estimates $2.2 trillion is required to finance free higher education and eliminate student loans. Imposing fines on Wall Street speculators will cover this cost.
The Wall Street Speculative Tax will reportedly raise $2.4 trillion over the next decade. This involves:
- 0.5% tax on stock trades, or about 50 cents for every $100 in stock
- 0.1% fee on bond trades
- 0.005% fee on derivatives trades
One of the major economic points of Sanders’ student debt elimination plan is the major economic benefits this would produce over the next decade. By freeing millions of people from paying hundreds of dollars every month for 10 years or more, the economy will be boosted by over $1 trillion, creating about 1.5 million new jobs every year. More people will feel comfortable buying homes, starting businesses, or otherwise investing in the economy.
On top of taxing the wealthiest and Wall Street, this proposal from the Sanders campaign can pay for itself over 10 years through economic progress.
The Proposal Does Not Eliminate All Student Debt
Critics of the Sanders campaign say that the proposal is too expensive and does nothing to help many borrowers who need debt relief. In fact, the top quarter of American earners currently have about a third of the student loan debt, and Sanders’s plan does not offer any kind of financial relief for this group. Financial advisers say that this group is capable of repaying their student loan debt, but also point out that any student loan borrower can repay loans with some planning.
Much of the Sanders campaign’s proposal hinges on eliminating student loan debt for a long time to increase the economic power of not just millennials and Gen Zers, but of future generations. Getting rid of student debt immediately would raise the gross domestic product in the short term, which would improve American economic standing in the long term.