Face of Nation : WASHINGTON — If Bernie Sanders’ student loan plan evoked deja vu Monday, it’s because of its remarkable similarities with the one Elizabeth Warren proposed earlierthis year.
The biggest difference?
Sanders’ plan doesn’t have caps or limits. It would offer loan forgiveness no matter how much people earn or how much debt they have. Put another way: His plan would forgive the big college and graduate-school debts of high-earning professionals such as doctors and lawyers.
Sanders’ plan would make those people wealthy, fast.
For many liberals, part of the problem with Warren’s plan was that it would end up benefiting the rich more than the poor. That’s because people who take on more debt typically earn more.
That’s likely to be amplified even more with the proposal from Sanders, a senator from Vermont who again is seeking the Democratic nomination for president.
The concepts behind the plans are the same: less debt would benefit the country broadly.
Warren’s plan would forgive up to $50,000 in debt for households earning less than $100,000 annually. Families earning more than that would receive debt forgiveness on a sliding scale. Those earning more than $250,000 would be ineligible.
Sanders’ plan doesn’t have those caps. Instead, his call is one to eliminate “all student debt,” which would likely include private and federal student loans. Sanders said at a press conference that he believed that the plan would overwhelmingly benefit the working class.
“It cancels 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,” Sanders said in a statement. He introduced the bill Monday with U.S. Reps. Ilhan Omar, D-Minn., and Pramila Jayapal, D-Wash.
The universality of the Sanders plan indeed would benefit some people who would have been left out of the Warren plan, said Colleen Campbell, a director at the left-leaning think tank The Center for American Progress.
Borrowers of color who earn a lot but don’t have a lot of money saved could start to build more wealth to be on the same page with their white counterparts, she said.
But that doesn’t address a bigger issue associated with these plans: They still leave out a lot of people.
“We have to take into account: They’re not truly universal because not everyone enrolls in college,” Campbell said.
And if Congress chooses to spend taxpayer money college costs, she said, the country may have less money to spend on other concerns, such as the affordability of health care.
Another key difference: Warren, a Democratic senator from Massachusetts who is also running for president, specifically cut out for-profit colleges in her debt-relief and free college plan. Sanders’ plan doesn’t mention them. These types of schools often are criticized for lower graduation and higher student-loan default rates compared with their peers.
The two senators would pay for their plans differently, too. Warren’s plan would rely on a 2% tax on households with a net worth of $50 million or more. Sanders’ plan would be funded through a series of taxes on Wall Street, including a 0.5% tax on stock trades, a 0.1% fee on bonds and a 0.005% fee on derivatives.
Both lawmakers also would make public colleges free. (Free college also played into Sanders’ 2016 run for president.)
But that may not be fair to all Americans, said Carlo Salerno, an education economist at the software firm CampusLogic. It may be unfair to make access to public colleges free, but not private ones.
Moreover, not everyone, he said, uses loans to pay for college. Families who lived an austere lifestyle to help pay for their kids’ college fund might feel cheated. And there’s a chance, he said, that people may stop paying their loans now in the hope their debt may be forgiven in the future.
“We don’t want to run the risk of creating a false narrative that this is going to happen,” Salerno said. “There are probably some people who are going to behave off these messages.”
Indeed, both Sanders’ and Warren’s plans have little chance of passing a GOP-controlled Senate.
There’s an existential problem as well. In making public college free, the idea is to reduce future debt-accumulation. But the Sanders plan, for instance, doesn’t include free graduate school. And after an initial round of debt forgiveness, Campbell said, the plan doesn’t address what to do for future borrowers who are attending graduate school or a private university.
