
Sen. Bernie Sanders on Monday proposed eliminating all of the nearly $1.6 trillion in outstanding student loan debt owed by Americans, raising the stakes on an issue that has increasingly animated the progressive base of the Democratic party.
Sanders is the latest 2020 presidential contender to propose a one-time cancellation program that would forgive large portions of student loan debt, which is owed by some 45 million Americans.
His plan follows one released earlier this year by Sen. Elizabeth Warren, (D-Mass.), who called for forgiving $640 billion of student loan debt.Sanders’ call for completely eliminating existing student loan debt is sure to rekindle divisions among progressives and Democratic primary voters more broadly over whether sweeping new government benefits should be available to all — or targeted to low- and middle-income families.
“If we could bail out Wall Street, we sure as hell can reduce student debt in this country,” Sanders said at a campaign event Sunday at Clinton College in Rock Hill, S.C.
The key difference between Sanders and Warren is that Warren seeks to limit loan forgiveness for wealthier student loan borrowers, rather than extending the relief to all. Her proposal would forgive $50,000 of debt for borrowers earning less than $100,000, with proportionally less debt relief for those earning up to $250,000 and no benefit for borrowers beyond that income level.
The proposal to cancel all existing student loan debt is one component of Sanders’ overall $2.2 trillion higher education plan, which includes eliminating tuition at public colleges and some private schools that serve large swaths of minority students.
Sanders would pay for his higher education plan by imposing a new tax on Wall Street transactions, including stock trades, bonds and derivatives. His campaign said that taxes would generate more than $2.4 trillion over the next decade, enough to cover the $2.2 trillion higher education plan.
The Sanders legislation would also cap the interest rate on all new federal student loans at 1.88 percent. The current rate on new loans ranges from about 4.5 percent for undergraduates to about 7 percent for Parent PLUS and some graduate student loans.
The bill would also triple funding on Federal Work-Study and double money for federal programs that help low-income students enroll in and graduate from college.
Sanders previously called, during the 2016 presidential campaign, for eliminating tuition at public colleges and universities for all students. He sparred over that issue with Hillary Clinton, who attacked his plan for subsidizing wealthy families who can already afford to pay for college. Sanders ultimately backed a compromise with Clinton ahead of the 2016 Democratic convention that called for limiting free public college tuition to families earning less than $125,000.
Sanders' latest plan would go even further in eliminating tuition at public colleges and universities for all students. It would provide new federal funding to help states eliminate costs for low-income students beyond tuition, for instance. And it also aims to eliminate tuition for low-income students at some 200 private institutions that serve large numbers of minority students, including historically black colleges and universities.
Critics of the debt forgiveness on both sides of the aisle have said that it would provide large benefits to higher-income families who have student loan debt from expensive graduate degrees.
Other Democratic candidates, such as Mayor Pete Buttigieg, have positioned themselves as more moderate on the issue, saying that canceling student loan debt unfairly benefits those who go to college over those who don’t. Sen. Amy Klobuchar (D-Minn.) has rejected the idea of free tuition at four-year colleges as unrealistic and too expensive, though she supports free community college.
Article originally published on POLITICO Magazine