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Financed by Tax on Wall Street Speculators, Sanders Plan Would Wipe Out All $1.6 Trillion in US Student Loan Debt

"We bailed out Wall Street in 2008. It's time to tax Wall Street's greed to help the American people."

Democratic presidential candidate Sen. Bernie Sanders (I-Vt.) speaks to the crowd during the 2019 South Carolina Democratic Party State Convention on June 22, 2019 in Columbia, South Carolina. (Photo: Sean Rayford/Getty Images)

As part of a bold legislative package that would make public colleges and universities tuition-free, Sen. Bernie Sanders on Monday unveiled a plan to wipe out the $1.6 trillion in student loan debt that is saddling an estimated 45 million Americans.

"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."
—Sen. Bernie Sanders

"This is truly a revolutionary proposal," Sanders told the Washington Post, which reported the details of the Vermont senator's bill late Sunday. "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, a 2020 Democratic presidential candidate, released his proposal alongside Reps. Ilhan Omar (D-Minn.) and Pramila Jayapal (D-Wash.), who introduced the Student Debt Cancellation Act and the College for All Act in the House.

"I am one of the 45 million people with student debt—45 million people who are held back from pursuing their dreams because of the student debt crisis," Omar tweeted Sunday. "It's why I'm proud to stand with Sen. Sanders and Rep. Jayapal to pass college for all and cancel student debt."

The three lawmakers introduced their proposals in a press conference Monday morning outside the U.S. Capitol building. Watch:

Jayapal, Omar, and Sanders also held a Q&A session on their legislation following Monday's press conference:

Vox's Tara Golshan called Sanders's legislative package the "most ambitious higher education plan in the Democratic 2020 presidential primary so far."

Unlike means-tested plans introduced by other 2020 contenders, Golshan observed, Sanders's legislation would cancel student debt for everyone "regardless of their income or assets."

Keane Bhatt, a spokesperson for Sanders, told Vox, "We believe definitionally that if you are the upper elite, that you by definition would not have had to take out student loans."

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"There is something to be said about simple, intelligible policies that build broad constituencies," Bhatt said.

Golshan noted that while Sanders's plan is a "universal program—students from any financial background would benefit from the elimination of tuition—the proposal specifically targets lower-income students by increasing the federal Pell Grant program, tripling funding for the work-study program, and creating a dollar-for-dollar federal match to states to eliminate additional costs related to going to college."

According to the Post, Sanders would pay for his plan with "a tax on Wall Street his campaign says will raise more than $2 trillion over 10 years."

"Sanders is proposing to pay for the legislation with a new tax on financial transactions, including a 0.5 percent tax on stock transactions and a 0.1 percent tax on bonds," the Post reported. "Such a levy would curb Wall Street speculation while reducing income inequality, according to a report by the Century Foundation, a left-leaning think tank."

Warren Gunnels, Sanders's staff director, tweeted, "If we could give a multi-trillion bailout to Wall Street, yes we can make college for all a reality."

Sanders echoed Gunnels in a tweet Sunday night, writing, "We bailed out Wall Street in 2008. It's time to tax Wall Street's greed to help the American people."

According to the Post, the Vermont senator's new plan will go beyond the tuition-free public college proposal that was a key plank of his 2016 presidential campaign platform.

"Sanders's bill includes $1.3 billion a year for low-income students at historically black colleges and universities," the Post reported, "and $48 billion per year for eliminating tuition and fees at public schools and universities."

The Vermont senator's debt cancellation proposal comes just weeks after he unveiled a sweeping K-12 education platform that includes a national ban on for-profit charter schools, free universal school meals, and a significant raise for teachers.

"More than one million people default on their student loans each year," Sanders tweeted Sunday. "We have got to make public colleges and universities tuition-free."

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