Sen. Bernie Sanders announced a plan to end country’s $1.6 trillion outstanding student loan debt, in a bid to intensify debate on US higher education policy, on Monday.
The legislation proposed by the Democratic presidential candidate titled as “The College for All Act” will release the student debts of all 45 million Americans that will be paid through a new tax imposed on the financial transactions carried out by the Wall Street. The proposal goes one step ahead than fellow Democratic candidate Elizabeth Warren’s plan, which caps student debt expunging at $50,000 and offers no release to borrowers who earn more than $250,000.
Outstanding education debt has led to an eclipse on credit card and auto debt. The average college graduates who leave school was up from $10,000 in the 1990s to $30,000 as of now. Moreover, almost 28 percent of loan borrowers were in delinquency or default. Sanders’ plan would make two and four year degree programmes taught at American colleges and universities free of tuition and debt, with tuition-free trade schools and apprenticeship programmes.
“This is truly a revolutionary proposal,” Sanders told The Washington Post. “In 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 is introducing this legislation with Rep. Ilhan Omar, D-Minn., and Rep. Pramila Jayapal, D-Wash., the co-chairwomen of the Congressional Progressive Caucus. The $2.2 trillion plan would be paid through a new tax imposed on financial transactions, including 0.5 percent tax on stock transactions and a 0.1 percent tax on bonds, with a levy that would raise up to $2.4 trillion over the next decade.
Critics say Sanders and Warren’s plan were too expensive and fails in targeting the borrowers who needed the most amount of relief. The top tier of American earners held almost a third of the student debt. “Most borrowers are capable of repaying their student loans,” said Mark Kantrowitz, the publisher of SavingForCollege.com.
Proponents of the plan say that the proposal offers a relief to the next generation of Americans from the debt that had ballooned over the last decade, stunting their financial lives. Researches indicate that expunging student loan debt could raise Gross Domestic Product, adding more than one million jobs in the marketplace with an increase in small business formations and homeownership rates as well.