Bernie Sanders's latest campaign promise is a proposal to forgive all outstanding US student debt, and raising the $2.2 trillion needed over a decade to make lenders whole by taxing Wall Street speculators with a 0.5% tax on stock trades, a 0.1% fee on bonds, and a 0.005% fee on derivatives.
The debt relief would apply to any of the 46 million people currently repaying the $1.6 trillion in undergraduate and graduate loans.
Elizabeth Warren has already proposed to wipe out up to $50k per student debtor and to make state colleges tuition-free, while Sanders's Thurgood Marshall Plan for Public Education would comprehensively reform elementary and secondary education.
Student debt is a millstone around America's neck, producing distortions that beggar the imagination, from debt exiles who can't come back to the USA to a mundane form of "reverse affirmative action" that gives the wealthy preferential access to education and opportunity.
Some self-described progressives within the Democratic party (including would-be 2020 presidential nominee Pete Buttigieg) have campaigned against universal access to education and debt-forgiveness, arguing that the benefit should be means-tested to exclude the wealthy lest education become "irrationally cheap"; JW Mason's rebuttal: "Suppose users of Central Park are higher-income on average; is progressive policy then to fence it off and charge admission?" (in other words, if public goods disproportionately benefit the affluent, we can either strive to make them more inclusive or to recoup the cost of providing them, but not both).
I am a donor to both Bernie Sanders's and Elizabeth Warren's campaigns.
The plan is part of a more comprehensive "college for all" program that Sanders has already released in pieces and includes free tuition at all four-year public colleges and universities, as well as community colleges. The broader proposal also includes subsidies to reduce the cost of tuition and fees for low income students at private colleges that historically serve underrepresented communities.
Sanders will also release a detailed roadmap -- centered on new taxes on Wall Street -- to raise the $2.2 trillion dollars necessary to pay for this program and his other college funding plans. It will include a 0.5% tax on stock trades (or 50 cents for every $100 worth of stock), a 0.1% fee on bonds, and a 0.005% fee on derivatives. Sanders believes that could raise more than $2.4 trillion dollars over the next ten years.
Sanders has already introduced the Wall Street speculation tax, which he calls the Inclusive Prosperity Act. At an event on Sunday in South Carolina he delivered the political argument for using it to help millions of Americans struggling with student debt.
"Congress voted to bail out the crooks on Wall Street, do you remember that?" he asked the crowd to a chorus of boos. "They provided seven hundred billion in federal loans and in addition trillions of dollars in zero or very low interest loans. So I think the time is now for Wall Street to repay that obligation to the American people. If we could bail out Wall Street, we sure as hell can reduce student debt in this country."
College for All and Cancel All Student Debt [Bernie Sanders]
Bernie Sanders to unveil plan to cancel all $1.6 trillion of student loan debt [Ryan Nobles and Gregory Krieg/CNN]
(Image: Donkey Hotey, CC-BY)