Speaking Tuesday at Johnson State College in Vermont—on the same day data from the New York Fed showed student-loan delinquencies are on the rise—Sen. Bernie Sanders (I-Vt.) called for a "revolution" in the way higher education is funded in the U.S.
"Because of the high cost of higher education, many bright young people can no longer afford to go to college and millions of others are leaving school saddled with debt," he said. "This is absurd. This is absolutely counter-productive to our efforts to create a strong economy."
"We must fundamentally restructure our student loan program. It makes no sense that students and their parents are forced to pay interest rates for higher education loans that are much higher than they pay for car loans or housing mortgages."
—Senator Bernie Sanders
The senator proposed tuition-free courses for freshmen and sophomores at all public colleges and universities, and suggested tying increased federal funding to greater state support for higher education. He also called for reforms to the federal student loan program—reforms that could be paid for by closing loopholes that give tax breaks to large corporations and the wealthy.
At a town hall meeting at Lyndon State College on Monday, Sanders reportedly said: "Can we afford to invest in higher education? The answer is yes we can. But one of the things that we have to do is institute real tax reform."
The non-profit Project on Student Debt reported at the end of last year that of those U.S. students who did graduate in the class of 2012, seven in 10 had educational debt.
Education loan balances have skyrocketed over the past decade, and data from the New York Fed released Tuesday showed that Americans are struggling to keep up with payments. The nation’s student-loan balance climbed by $31 billion last quarter to a whopping $1.16 trillion, making it the largest source of debt after mortgages.
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According to Bloomberg, the data showed 11.3 percent of student loans were delinquent in the final three months of 2014, up from 11.1 percent in the prior quarter.
The publication notes: "Delinquency rates for student loans probably understate the actual situation... About half of the student loans are in deferment, in grace periods or in forbearance, temporarily removing them from the repayment cycle."
"Although we’ve seen an overall improvement in delinquency rates since the Great Recession, the increasing trend in student-loan balances and delinquencies is concerning," Donghoon Lee, research officer at the New York Fed, told Bloomberg in an e-mailed statement. "Student-loan delinquencies and repayment problems appear to be reducing borrowers’ ability to form their own households."
In his speech, delivered just before Sanders—a potential 2016 presidential candidate—heads to Iowa for a three-day visit, the senator declared: "We need a revolution in the way higher education is funded. We must fundamentally restructure our student loan program."
He added: "It makes no sense that students and their parents are forced to pay interest rates for higher education loans that are much higher than they pay for car loans or housing mortgages. We must also end the practice of the government making $127 billion over the next decade in profits from student loans."