Bernie Sanders: America Is Drowning in Student Debt. Here’s My Plan to End It
A decade ago, America committed trillions of dollars to bail out Wall Street banks, whose greed had cratered the economy. Now, it is time to commit a fraction of that to cancel the student debt that is crushing 45 million Americans and dragging down our economy.
Let’s be clear: The younger generation was dealt an enormous blow by the Wall Street crash of 2008 and the Great Recession that followed. Millions of them saw their parents lose their jobs, homes, and life savings because of the greed, recklessness, and illegal behavior of a handful of financial executives.
While those financial executives were rescued by the government, young people were told to lift themselves up by their own bootstraps—specifically, by getting a higher education. But as financial support from state governments declined, millions of them graduated college or dropped out of college with suffocating and oppressive debt.
In the wealthiest country in human history, it does not have to be this way—and in fact, it was not this way for earlier generations.
In 1944, as World War II was coming to an end, the U.S. government did the right thing and passed the G.I. Bill, which made free higher education available to all those who served in the Armed Forces. That act not only improved the financial well-being of the Greatest Generation, but it also laid the groundwork for the biggest expansion of the American middle class in modern history.
A half-century ago, the cost of attending some of our best public colleges and universities was virtually free. And 40 years ago, the maximum federal Pell Grant paid for nearly 80% of tuition, fees, room, and board at a four-year public college.
By contrast, today it costs over $21,000 a year to attend those same schools, and maximum Pell Grants cover only about 30% of those expenses.
That means the average college senior graduates with over $30,000 in student debt—and more and more, this debt lasts a lifetime. Since 2004, the number of Americans 60 and over with student loan debt has more than quintupled—from 600,000 to 3.2 million—and tens of thousands of older borrowers have had their Social Security benefits seized by the government to pay for student loans.
Not surprisingly, at a time when workers’ real wages have stagnated, this debt hits students from lower income and minority families the hardest.
One 2013 study found that students from families making between $40,000 and $59,000 a year racked up $13,000 more debt than did those from wealthier families who make $150,000 or more a year. Meanwhile, upon graduating African Americans have about $7,400 more in student debt than white graduates do, and just four years after graduating, the debt gap widens to nearly $25,000.
It is not merely immoral to doom an entire generation to endless educational debt—it is also bad for our economy.
The Federal Reserve reported that in 2014 alone, student loan debt prevented 400,000 young Americans from purchasing homes. Karthik Krishnan, a professor at Northeastern University who specializes in student debt, told CNBC last year that people with $30,000 in student loan debt are 11% less likely to start businesses than are those without debt.
“You do stand to see longer-term negative effects on people who can’t pay off their student loans,” Federal Reserve Chair Jerome Powell told Congress in March 2018. “It hurts their credit rating; it impacts the entire half of their economic life.”
Under our legislation to cancel all $1.6 trillion of student debt, the economy would get a boost of approximately $1 trillion over the next decade and up to 1.6 million new jobs would be created each year, according to a report from the Levy Economics Institute of Bard College. At the same time, millions of Americans would have the financial resources they need to buy new homes, buy new cars, or open up small businesses.
Moving forward, our legislation will also make every public college and university, historically black college and university, trade school, and apprenticeship program in America tuition-free and debt-free, because we understand that education must be an economic right for all, not a privilege for the few.
Of course, doing all of this will take resources—and that is where Wall Street comes in. We will pay for this initiative by imposing a tax on Wall Street speculators, similar to what exists in dozens of other advanced economies. Ten years ago, the working class bailed out Wall Street. Now, it’s Wall Street’s turn to pay them back.
If we do not act boldly, our younger generation will have a lower standard of living than their parents and grandparents did. We cannot let that happen.
It is time to end the absurdity of sentencing an entire generation—the millennial generation—to a lifetime of debt for the “crime” of doing the right thing: getting a college education.
Wall Street will almost certainly fight us at every turn, as will the student loan servicers who make big profits off the status quo. But I am confident that if we stand together and build a grassroots movement, we can treat education the way we should: as an inalienable human right.
Bernie Sanders is the junior U.S. senator from Vermont and a Democratic candidate for president.
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