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Sanders writes: "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."

Bernie Sanders. (photo: Scott Eisen/Getty)
Bernie Sanders. (photo: Scott Eisen/Getty)


ALSO SEE: Sanders on Steyer's 2020 Bid: 'Tired of Seeing Billionaires
Trying to Buy Political Power'

America Is Drowning in Student Debt. Here's My Plan to End It

By Bernie Sanders, Fortune

10 July 19

 

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.

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+7 # Rodion Raskolnikov 2019-07-10 15:32
I still don't know why students borrow money for college at all. Have they or their parents not learned yet that college loans are a scam?

Sanders is right to contextualize student loans in the 2008 wall street melt down. The immediate cause of that was the collapse of bundled real estate mortgages that suddenly lost value because of so many mortgage defaults. Banks had been repackaging and rebundling home mortgages and selling them over and over to anyone stupid enough to buy them (usually pension funds).

Now students loans are serving the same function for banks. They loans are bought up, repackaged, bundled and sold to investors. Unlike mortgages, no one can default on a student loan. They are a sure bet for investors.

The problem with student loans that accounts for their explosion is the involvement of Wall Street. It corrupts everything it touches. Its goal is to drive up the volume in order to make more profit. Just as home buyers were defrauded into junk mortgages, now students are defrauded into junk college loans.

When Sanders cancels these loans, he needs to make sure the banks take the loss. While Sanders is at it, he needs to regulate the investment industry so it cannot convert anything more into investment vehicles and milk out profit from all ordinary people.
 
 
+11 # DongiC 2019-07-10 17:36
Time for Wall Street to help the college kids with these awful debts as the banks and financers were assisted by the federal government in 2008. What's fair is fair and Sanders is the champion of those fighting for fairness. A vote for him in 2020 is a vote for financial sanity and basic equity to all classes in America. Let's put this wonderful man in the White House come the next presidential election.
 
 
+2 # Robbee 2019-07-11 11:01
Quoting DongiC:
Time for Wall Street to help the college kids with these awful debts

- this is exactly what Y O U - D O N ' T - S E E
when bernie is not running for prez?

f o r t u n e - m a g a z i n e - running a story that makes sense!

if bernie and elizabeth were not running for prez?

WE WOULD HAVE NO PROGRESSIVE IDEA HOW A CANDIDATE COULD BE PROGRESSIVE! - no idea! - none!

America Is Drowning in Student Debt. Here's My Plan to End It
By Bernie Sanders, Fortune
10 July 19

corporate-sponsored dems all run in a progressive minefield - judged by their progress toward a progressive ideal - double pell grants solves nothing but a personal proglem for 10,000 students!

"free public college for all!" who can handle the courseload!

go bernie!
 
 
+3 # tedrey 2019-07-10 20:06
Reason, compassion, and national honor say "Amen." Will we let greed stand in the way?
 
 
+3 # PABLO DIABLO 2019-07-11 09:54
One and one half percent of the Military budget (equals $11 Billion per year) would pay for free college tuition for everyone. What do you want to invest in, Never ending Wars or an educated public/workforc e.
Of course, an educated public might wake up to the greed and corruption of the wealthy and their complete influence over our government.
 
 
+4 # Rodion Raskolnikov 2019-07-11 12:37
$20 billion or the cost of a few F-35 bombers would end all homelessness in the US.

Clearly the money is there if we could only stop giving it to the weapons manufacturers. But we can't stop that. They own the US government.
 
 
0 # laborequalswealth 2019-07-14 07:40
Use the Laffer curve against the GOP : Student debt is a TAX on education imposed up on the young whose elders have a practical if not moral obligation to educate the next generation.

Impoverishing the next generation is tantamount to treason.
 

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