Bernie Sanders' student debt plan bails out the rich

Bernie Sanders reveals an even bigger plan than Elizabeth Warren, but does it go too far?

  • Bernie Sanders has released a plan to forgive all the student debt in the country.
  • It is even larger than the plan Elizabeth Warren put forward two months ago.
  • The plan has drawn criticism for forgiving the debt of both the poor and those well off enough to pay their own debt.

Americans are saddled with 1.6 trillion dollars of student loan debt. This number not only keeps young people from buying homes, starting families, investing in businesses, and living at the same standard as their parents but also weighs the economy down.

How to solve this problem is a significant issue of the 2020 presidential campaign. As all candidates try to court the youth vote and address the crisis, Bernie Sanders has thrown down the gauntlet and introduced a plan that dwarfs all others.

Bernie Sanders’ plan to end student debt. 

Bernie Sanders, the self-described democratic socialist from Vermont with crazy hair and an endearingly grumpy old man attitude, just released his plan to end all student debt in the country.

You read that right, all of it

The plan would forgive all 45 million borrowers from their debt, no questions asked. It would do so by either simply canceling debt held or insured by the federal government in the case of government loans and by buying up private loans at cost and then forgiving them in all other cases.

In addition to this, it the bill would also end tuition at two and four-year public colleges and trade schools, increasing funding to historically black and tribal colleges, expand Pell grants, and cap student loan rates.

The plan would cost $2.2 trillion and be paid for by a .5 percent tax on stock trades, a .1 percent tax on bond transactions, and a .0005 percent tax on dividends. Given that 80 percent of all stock is owned by 10 percent of the American population, this amounts to a tax on the rich through Wall Street.

What do the experts say?

Reviews of the program are mixed, as they were perhaps doomed to be.

The political right has already started to have a field day with it, with the usual suspects all calling it too expensive, a bribe, or otherwise fundamentally flawed. On the left, some criticism has focused on how the plan would forgive debt held by people making enough money not to need help.

Some have pointed out that it won't end student debt forever. A large chunk of the student debt in this country is taken out for graduate school, which tends to be more expensive than undergraduate programs. Even if undergraduate education is made free, graduate education will likely continue to be costly and drive students into debt for the foreseeable future.

Marshal Steinbaum of the University of Utah has argued that, like Elizabeth Warren's plan, this proposal would lead to an economic boom as millions of Americans, freed from debt, would be able to invest and spend their money more freely. The result of this could be billions of dollars in growth, many new jobs, and increased wealth for low earners.

Former Secretary of Labor Robert Reich likes the plan and wrote on his Facebook page "Kudos to Sanders and others for introducing this important proposal. Student debt has been crippling our economy for far too long, and has been a huge strain on American families. Eliminating this burden for millions of Americans would help revitalize the middle class."

How does it compare to Elizabeth Warren’s plan?

Other candidates have proposals to deal with student debt. Most notable among them is Elizabeth Warren, who published her plan a couple of months ago.

Both programs are massive in scale and represent a paradigm shift in how we view higher education in this country. They both would wipe out an enormous amount of debt for millions of Americans boost the economy, and make undergraduate education free.

There are a few differences though. The biggest is that while Warren's plan forgives student debt for millions of people who have it, she leaves out those making more than $250,000 a year. Her plan also caps out at $50,000 of debt, everything above that is still on you. If you make more than $100,000, you're also subject to a slow phase-out of debt relief, so you won't get all of that $50,000. Bernie's plan includes everybody and would forgive all the student debt of the 1 percent too.

Ironic, isn't it? Bernie is the one willing to help the one percent get out of a bill. It's easy to understand why his plan is drawing criticism.

However, there is a method to the proverbial madness. Bernie argues that programs that apply to everybody are politically durable and less likely to be targeted later by people who pay for the plans but don't see any benefit. His reasoning isn't unique; that exact line of thinking is why Social Security is funded the way it is. Elizabeth Warren's plan is more straightforwardly a program to help reduce the wealth gap and makes less of a grab for this kind of support.

There is another idea to it, too, that a public program is for everybody and not just the people who need it the most. Just as civil and political rights are granted to everyone no matter if they use them or not, economic entitlement programs are also to be given to everybody even if they make enough not to need them to survive.

Or, as Bernie put it, "I believe in universality. If Donald Trump wants to send his kids to public schools, he has a right to do that."

The student loan crisis represents a failure of Americans to fund our education system adequately. Both Bernie Sanders and Elizabeth Warren have plans to forgive trillions of dollars' worth of debt and make public education debt free going forward. While the devil may be in the details, the fundamentals of both programs should be considered by everyone concerned about student loan debt, education, and the future of this country.

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