Senator Bernie Sanders, one of the top Democratic party contenders for presidential nomination, announced a plan on Monday (24 June) to cancel the country’s $1.6 trillion outstanding student loan tab, CNBC reported.
Under the proposed legislation called the “The College for All Act”, around 45 million Americans will be released from their student debt. The debt waiver will be funded through a new tax on Wall Street transactions.
The proposed act would cover $1.6 trillion in student debt and help 45 million Americans achieve an average saving of about $3,000 a year. The $2.2 trillion funding required for the plan will be paid for by a 0.5 per cent tax on stock trades, a 0.1 per cent tax on bonds, and a 0.005 per cent tax on derivatives.
Sanders’s plan goes further than that of his fellow Democratic party contender, Senator Elizabeth Warren, who recently released a proposal on higher education that includes forgiving $50,000 in student debt for those now earning $100,000 or less, and some loan forgiveness for those earning more than that. It offered no relief to borrowers who earn more than $250,000.
Both Sanders and Warren have given a call to make public colleges and universities free for students. Sanders is also advocating lowering the interest rates on federal student loans, eliminating any profit the federal government earns from the loans, and to reform student-loan refinancing.
CNBC reported that the outstanding education debt in the US has eclipsed credit card and auto debt. An average college graduate leaves school with an outstanding debt of $30,000, up from $10,000 in the 1990s. An estimated 28 per cent of student loan borrowers are in delinquency or default.
Interesting, both the main political parties in Tamil Nadu, DMK and ADMK, included the promise of an education loan waiver by the AIADMK and the DMK in their manifestos for the recently concluded Lok Sabha elections. Tamil Nadu reportedly has the maximum exposure to education loans in the country.
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