Bernie’s Student Debt Plan Is Way Too Nice to the Rich

Bernie Sanders announced a bill on Monday that, if passed into law, could erase all student debt in the country. The presidential candidate's latest, $2.2 trillion version of the "College for All Act" is the most far-reaching plan yet to address the 45 million Americans suffering under a $1.6 trillion debt load. The bill, which was set to be co-sponsored by Representatives Ilhan Omar and Pramila Jayapal in the House, would also prevent another student loan bubble from forming in the future: it calls for free tuition at public universities, community colleges, and trade schools.

Back in April, fellow Democratic presidential candidate Elizabeth Warren announced that she wanted to help erase the debt of borrowers with household incomes below $250,000 a year on a prorated basis. Her proposal, which would cancel debt for 75 percent of student borrowers and also make college free, was heralded for its progressive bonafides and for being comprehensive at a time when some of her opponents had not staked much novel ideological ground.

Months later, Sanders has dropped a far more expansive plan, thus laying the groundwork for what some experts say might be the dynamic over the rest of the primaries—for better or for worse. The concern, they say, is that the proposal risks setting off an arms race of Democrats promising things they won’t ultimately be able to deliver. The plan also has the potential to turn off progressives who might be queasy at the idea of redistributing money from the ultra-wealthy to the already well-off.

"There's a danger these plans lead to a stereotype that Democrats will promise the moon and are not serious," said Louis Caldera, an adjunct professor of law and senior affiliate in the Program on Law and Government at American University. "And the other candidates can get pulled in that direction, because if you're the other candidate who's sitting there saying we have to be fiscally responsible, you look like the candidate who's saying we have to end the party early."

Although there's a longstanding debate over whether or not free college in America would constitute a regressive tax, which is to say force low-income people to help fund the educations of those who will ultimately make more money than they do, both Sanders and Warren have skirted it. Warren wants to pay for her plan with a tax on people with more than $50 million worth of wealth—roughly the 0.1 percent—while Sanders is calling for a tax largely on Wall Street speculation.

While it's hard to imagine the average voter would have any sympathy toward those affected by such taxes, Fred Wherry, a Princeton professor who heads up the university's Debt and Dignity project, said his research shows some borrowers might find Sanders' plan patronizing. Specifically, he said, the more than 4,000 complaints to the Consumer Financial Protection Bureau about student loan debt he's analyzed show lots of people just want an easier way to pay off their college bills. Making student loans dischargeable through bankruptcy, rebuilding the CFPB that was gutted by the Trump administration, or just providing more flexibility for repayment might be more appealing options for those people, he said, compared with the idea of just having the super rich take care of it.

"I think there will also be both resentment among voters who have scrimped and saved to pay off their debt and also among other people who see themselves as those who are scrimping and saving as best as you can, but aren't being given an outlet to honor these debts," said Wherry. "These are people who will either be silent or resistant."

Voters might find the Sanders plan unpalatable for other reasons. For one, Wherry said, plenty of folks won't get behind the idea that people who have gone to the Harvards and Yales of the world need any sort of financial help whatsoever; the money could be redistributed elsewhere. More importantly, the professor—who has not yet decided which candidate to support in 2020—suggested America might simply not be ready for such a wide-reaching plan. As he put it, this sort of egalitarianism isn't baked into our country. It wasn't part of the equation when we built railroads or designed our byzantine healthcare system, and some people might just not be ready for what Sanders is selling.

"The Sanders plan, in a different universe, I would jump up and down and say this is a great way to start from scratch," Wherry said. "But it's hard to imagine a better version that could pass than the Warren plan. It would be a struggle to pass it, but it's passable. I don't see anything better out there than what Warren proposes."

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