Senator Bernie Sanders announced his plan to cancel America’s student loan debt today. This plan goes beyond Elizabeth Warren’s plan, which was aggressive in its own right. Sanders intends to eliminate all of the nation’s tuition-related debt, from public to private loans, through undergraduate and graduate education.
“This is truly a revolutionary proposal,” said Sanders. “In a generation hard hit by the Wall Street crash of 2008, it forgives all student debt and ends the absurdity of sentencing an entire generation to a lifetime of debt for the ‘crime’ of getting a college education.”
The senator’s plan is fairly simple: he plans to eliminate all college debt. How he will pay for it is another issue.
Sanders claims that he can raise the necessary funds, which are around $1.6 trillion, with his new Wall Street tax plan. But that plan is the center of some significant controversy itself.
A few weeks ago, Sanders proposed a plan that would tax stock market trades at various amounts. He claims that doing so would raise $2 trillion over the next decade. That amount would clearly be enough to compensate for a $1.6 trillion erasure of student debt.
But the $2 trillion figure is significantly unreliable. A more modest estimate from the Congressional Budget Office came through at $776 billion. That would obviously leave the Senator almost a trillion dollars short of paying for his loan program.
Whether he can pay for it or not, Sanders is the latest in a crowded field of Democratic politicians to announce some kind of debt cancellation or loan repayment plan. The moves have been criticized as “pandering” by their political opponents.
The Problem with Forgiveness
There is a bigger problem with the idea of debt forgiveness than just paying it, however: the college system itself.
-45% of college students report struggling with hunger
-56% report struggling with housing costs
-17% say they experienced homelessness
— Bernie Sanders (@BernieSanders) June 24, 2019
Sanders’ proposal would also make public school tuition free for anyone who wants to attend. But there is a basic misunderstanding of the value of an education inherent in that proposal.
The value of higher education relies on scarcity. College prepares you for a career because companies want to hire those who are highly educated. But the more people there are with college degrees, the harder it is to stand out in a crowded field.
Americans have raised college graduation as the ultimate virtue; however, the more people attend college, the more that accomplishment becomes inherently less valuable. Meanwhile, trade schools and other blue collar fields are under-attended and marginalized, seen as “lower class work,” all while jobs in those fields are becoming easier, more available, and higher paying.
Platform Before Practicality
Practically speaking, Sanders’ proposal is just political posturing. There is no chance of such a proposal passing before a Democrat is elected President, if even then. But Sanders is making it a central part of his platform.
Around the country, there are millions of students who are desperate for help with their student loans. Instead of looking for common sense, practical solutions to the problem, both sides are posturing and making grand claims.
Many will see the offer of student loan forgiveness as an appealing reason to vote for Sanders. Certainly, that is his hope. But the proposal on its face remains impractical, and does little more than give false hope to those who are already struggling under their loans.