(CNS News) — Senator Bernie Sanders said he has a plan to wipe out the $1.6 trillion in student debt owed by more than 40 million Americans: tax Wall Street transactions such as stock and bond trades.
The proposal is the latest from a Democratic presidential candidate that aims to tackle the growing problem of student debt, which has been blamed for blunting the economic prospects of million of Americans. Sen. Elizabeth Warren, Sanders’ rival for the 2020 Democratic presidential nomination, in April issued a plan to forgive student debt for college grads by adding an annual 2 percent tax on wealth above $50 million and a 1 percent tax on wealth more than $1 billion.
While the plans differ on how they would raise the money to pay off the country’s outstanding student debt, both proposals seek to boost the middle class by erasing a financial burden that can make it tougher for families to afford a home or car. Since the end of the recession a decade ago, the nation’s outstanding student loan debt has more than doubled, rising from $700 billion in 2009 to $1.6 trillion today.
“All Americans will get the college education or job training they need, while having all student debt forgiven,” Sanders, a Vermont independent, said in a Monday tweet. “We bailed out Wall Street in 2008. It’s time to tax Wall Street’s greed to help the American people.”
Sanders said his plan would also provide $48 billion in state funding to provide free tuition at state colleges and universities.
Sanders said he would raise the money to pay off the nation’s student debt by adding a 0.5% tax on stock trades, or 50 cents on every $100 of stock, as well as a 0.1% fee for bond trades and a 0.005% fee on derivative trades. His campaign estimates the taxes would generate $2.4 trillion over a decade.
Taxing financial trades isn’t a new idea. The U.S. imposed a tax on all stock trades until 1966, when the levy was eliminated. Other countries also raise money through taxing stock trades, including the U.K. and Germany, Sanders noted.
Meanwhile, the cost of a college education has far outstripped wage growth in recent decades, leaving many families struggling to foot the bill. Because a college degree provides a boost to lifetime earnings, students and their families often opt to take on thousands in debt in hopes of earning more down the road. But that can leave them struggling to repay their loans as they’re getting started in their careers.
Not only the young are weighed down by student debt. Americans age 60 and older owe more than $86 billion in unpaid college loans, while 40% of those 65 and older are in default, according to the Consumer Financial Protection Bureau.
Sanders said the plan would also help current and future students by easing the financial struggle many face once they’re in college. Almost half of college students report struggling with hunger and the cost of housing, for instance.
“In the richest country in the history of the world, students should not have to starve in order to get an education,” noted a statement on Sanders’ campaign site.