Of all the Democratic presidential candidates, Bernie Sanders has introduced the most ambitious proposals for eliminating student loan debt and making college more affordable. The Senator believes that college education is an inalienable human right and that going to college should not force students to borrow. He proposes to implement tuition and debt-free college for all and completely cancel student loan debt – all $1.6 trillion of it.
Here is his plan and how he will pay for it:
What Bernie Sanders Plans to Do about College Costs
- Offer tuition and debt-free public colleges, universities, HBCUs, Minority Serving Institutions and trade-schools to all
- Expand Federal Pell Grants to help cover non-tuition costs of attending school such as housing, books and supplies
- Triple funding for the Federal Work-Study Program
- Simply the Free Application for Federal Student Aid (FAFSA)
What Bernie Sanders Plans to Do about Student Loans
- Cancel all student loan debt for the 45 million Americans who owe about $1.6 trillion, tax-free with no limitations
- Put a cap on student loan interest rates going forward at 1.88% (the current average interest rate is 5%)
- Propose a cap on interest rates for borrowers who want to refinance student loans to 2.32%
- Allow the ability to discharge student loans in bankruptcy
“The promise of higher pay has not materialized for recent college graduates, who have been taking out more and more in student loans to keep up with the skyrocketing cost of tuition,” Sanders’s plan states. “This has led to a generation of young people unable to start families, buy homes, and follow their dreams.”
He notes in his plan that one in six college students will graduate with more than $50,000 in student loan debt. He says that since the average student loan borrower pays $3,000 in student loan payments, that money would be able to go towards buying a home or starting a business.
Sanders also points out that student loans aren’t just a problem for millennials. Three million older Americans have student loan debt and more than a hundred thousand are having Social Security checks offset to help pay off the debt.
How Bernie Sanders will Pay for Cancelling Student Loan Debt
In his plan to cancel all student loan debt and pay for college for all, Sanders has a plan on how to cover the estimated $2.2 trillion cost. To do this, he will impose a tax on stock trading. “It works by placing a 0.5 percent tax on stock trades – 50 cents on every $100 of stock – a 0.1 percent fee on bond trades, and a 0.005 percent fee on derivative trades,” his plan states.
If you are struggling with student loan debt, there are ways you can lower your student loan payments, including enrolling in an income-driven repayment plan, temporarily going on a deferment or refinancing student loans to lower your interest rate. Keep in mind that refinancing federal loans into private loans means the loss of federal loan perks, including student loan forgiveness, income-driven repayment plans and more.