On Monday, Representative Ilhan Omar and Senator Bernie Sanders will introduce a pair of companion bills in the House and Senate to completely eliminate all of the $1.6 trillion in student loan debt in the United States. The plan would impact 45 million people.
Here are more details of the proposal, from the Washington Post:
Sanders is proposing the federal government pay to wipe clean the student debt held by 45 million Americans — including all private and graduate school debt — as part of a package that also would make public universities, community colleges and trade schools tuition-free. [...]
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. 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, though conservatives warn it would stunt economic growth and investment.
Sanders’s campaign estimates that the financial transaction tax would raise about $2 trillion over a ten-year period, though as the Washington Post notes, “some tax experts give lower revenue estimates.”
Sanders’s plan comes months after Elizabeth Warren released her own plan to tackle student loan debt in April. Warren’s proposal would cancel debt up to $50,000 for people whose annual household income is less than $100,000; people who make up between $100,000 and $250,000 would have a smaller portion of their debt forgiven. Unlike Warren’s plan, Sanders and Omar are proposing to eliminate all student debt, including that held by wealthier Americans.
Whether people who make six figures should have their debt canceled is a contentious question. As HuffPost’s Amanda Terkel noted, people who are high earners now but are still saddled with student loan debt tend to come from more modest backgrounds. Still, many progressives are critical of universal plans. As the left-leaning think tank Demos wrote in a 2015 report on student loan debt and the racial wealth gap, plans to reduce student loan debt that don’t include income caps “would expand the divide between median Black and white wealth by an additional 9 percent.” (Personally, I feel all student loan debt is a scourge and a scam and should be eliminated, and if we’re taxing Wall Street hucksters to do it, all the better!)
Sanders’s legislation also includes a proposal to make public colleges and universities tuition-free. (In the House, Representative Pramila Jayapal has a bill to do the same.) While Sanders made tuition-free college a central component of his 2016 presidential campaign, his focus on student loan debt wasn’t a core issue. And we may have Omar to thank for the change. As the Washington Post’s Jeff Stein wrote, it was Omar who pushed “student debt relief to the forefront of the discussion.”