Not to be outdone by other 2020 Democratic presidential contenders, Sen. Bernie Sanders (I-VT) announced Monday morning that he plans to introduce legislation to forgive the student loan debt of around 45 million Americans — a plan that will easily cost upwards of $1.5 trillion.
CNBC reports that Sanders announced the plan — tentatively titled “The College for All Act” — at a press conference early Monday, adding that Sanders plans to pay for the massive handout with a tax on “Wall Street,” though Sanders and his team revealed only a general outline of the tax plan.
Instead, Sanders mostly followed up on his proposal with a series of nonsensical tweets suggesting that since Congress approved other costly, objectionable government projects like the Wall Street bailout, that Congress could easily approve erasing student loan debt owed to the federal government.
If we could bail out Wall Street, we sure as hell can #CancelStudentDebt.
— Bernie Sanders (@BernieSanders) June 24, 2019
The plan would go on, Sanders said, to include free two- and four-year degrees at public colleges and universities, in case any college-aged student were to miss out on the opportunity to help the federal government acquire more debt.
The plan also features a handful of sub-proposals, according to Vox Media, that operate as separate, though associated, handouts to students.
Sanders is proposing funding streams to states, tribes, and historically black colleges and universities (HBCUs) to allow them to eliminate undergraduate tuition and fees. The bill would also increase spending on work-study programs and build up federal grant programs for low-income students for additional costs related to getting an education, from housing and transportation to buying books.
“This is truly a revolutionary proposal,” Sanders reporters. “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.”
It’s also a strike at Sen. Elizabeth Warren (D-MA), Sanders’ main competitor for second place in the race to secure the 2020 Democratic presidential nomination. Warren has been on a roll lately, promising chunks of money to a handful of target demographics in order to pad her support numbers. Over the weekend, Warren announced a handout to LGBT couples who missed out on filing joint tax returns ahead of the Obergfell decision, and has talked occasionally about reparations for slavery.
Last week, Warren proposed a modified forgiveness plan for former students with outstanding debt, but capped her relief check at $50,000 per student making less than $250,000 post-graduation.
Sanders and his co-sponsors, Rep. Ilhan Omar (D-MN) and Rep. Pramila Jayapal (D-WA), claim that the program’s $1.5 trillion price tag (at minimum) could be paid “by a new tax on financial transactions, including a 0.5 percent tax on stock transactions and a 0.1 percent tax on bonds.”
But critics were quick to point out that students with responsible retirement plans or even minimal stock portfolios would be hit by Sanders’ plan and forced to pay for their own bailout. The plan also attacks typical IRAs and other low-risk stock-based savings plans that are supposed to help average Americans — not the “super-wealthy” — prepare for future or unexpected expenses, and sticks those most affected by the student loan debt burden with a hefty federal government debt burden.
Sanders’ plan also severely underestimates the cost of forgiving student loan debt, according to Brian Reidl, a senior fellow at the Manhattan Institute. While the public and private loan forgiveness does bring the plan close to a $1.6 trillion price tag, Sanders’ claims fail to take into account the cost of making college free going forward ($1.2 trillion, at least), as well as ongoing relief for those who still insist on taking out student loans (approximately $200 billion).
That brings the cost of Sanders’ plan far closer to $3 trillion than $1.5 trillion.
Reidl points out that there are extraneous economic factors to making college free, as well. An educational institution often supports the industry and survival of an entire town.
And this does not even address how “free” public college will eviscerate the non-elite private colleges. which will struggle mightily to compete for students. Many of these are small-town colleges that @KedronBardwell explains are in towns that are already struggling.
— Brian Riedl (@Brian_Riedl) June 24, 2019
Sanders doesn’t let such trifling considerations affect his proposed handouts, however.