As president, Bernie should cancel all student debt

In the United States, education is meant to be an equalizer, and higher education in particular is key to improving your chances in life. At least that’s how the story unfolds.

But in reality, millions of people cannot access higher education without going into debt. More … than 44 million people have student debt, and the total amount of outstanding debt in the United States has more than triple since 2006, totaling more than $1.5 trillion, or almost 8% of the country’s GDP.

Meanwhile, real wage growth is below 7 percent over the same period, while rents increased by more than 47 percent in real dollars.

Rather than serving as an engine of economic progress for the poor and the working class, higher education in the 21st century has created more inequalities by the explosion of student debt. While the very rich spend hundreds of thousands of dollars on bribe or deception their way to college, the poor, working class and middle class are forced to pay a premium to part of the employing class (student lenders and lending service companies) to obtain a credential so that families who have bought their place in the elite schools can exploit their work. The burden of student debt weighs the heaviest on black and hispanic students, and the disparity in amounts owed between black and white students grows considerably after graduation.

But it doesn’t have to be that way. The Secretary of Education has the power to erase most student debt with the pencil stroke.

President Bernie Sanders could do it. If he wants to win the lifelong loyalty of tens of millions of mostly young Americans to his politics, he should promise to cancel student debt as part of a larger plan to advance free tuition college for allthen follow when elected.

Student lenders and finance companies prey on the poor (and, with the skyrocketing costs of higher education, even the relatively well-off) in order to make obscene sums of money. Two of the biggest loan servicers Navient and Nelnet had revenues of $5.67 billion and $1.76 billion in 2018, respectively. These same companies were the subject of almost nine thousand consumer complaints filed against them for shady business practices in 2017.

And the federal government, rather than ensuring that higher education tuition is either non-existent or affordable, is instead taking the biggest slice of the student debt pie for itself – while these middlemen at For-profits are the bane of every student debtor’s existence, the vast majority of student debt ultimately belongs to the federal government.

Profiting from education is not a morally legitimate business. Access to the marvel of accumulated human knowledge is every person’s birthright, not a business plan. College education should be free.

But tuition fees are skyrocketing, tuition fees in public institutions rising almost 34% in the decade ending in 2016, the most recent year for which figures are available. This left many people with no choice but to take on large student debts, as evidenced by hot air balloon debt The figures. So, as we strive to make college education free for future students, we must also undo the damage done to multiple generations by past lending practices.

Student debt burden is a key factor donor down in class mobility for people born in the 1980s and later. With stagnant wages, jobs concentrated in a handful of expensive cities, and the few existing social welfare programs in the United States that are hard to access and constantly under threat, millions of people are delaying buying a home, having a baby. a child, saving for retirement or even getting medical care due to crippling student debt.

Student debt shrinks so deeply because it doesn’t just rip you off, it makes you feel like a failure. If college is supposed to be the key to a successful life, but you come out of it unable to make ends meet, you can’t help but think it’s your fault.

Forty-four million people are rightly sensitive to this issue – and they are ready to be mobilized around it.

There is a solution. Like Meagan Day pointed outthe Higher Education Act of 1965 gives the Secretary of Education the power to cancel student debt held by the federal government unilaterally, under the “compromise and settlement” provision. This would eliminate a huge financial burden on the working and middle classes overnight. The Ministry of Education could also buy the approx. $64 billion in private student debt, then use the same authority to cancel it.

One objection to this idea will be to ask whether the government can really afford to forgo $1.5 trillion or more in funds that debt cancellation would entail. In short, it can.

$1.5 trillion is the total amount that debtors owe the government, and only a small fraction of this amount is collected each year. But the feds cash in on $1.6 trillion every year personal income tax only. In fact, in 2017, the government had an annual revenue of about $3.3 trillion, 92% of which came from income taxes and payroll taxes. The remaining 8% includes all other forms of income, not just student loan income.

Whatever portion of the $1.5 trillion balance the government actually collects in any given year is therefore an insignificant portion of the federal budget. As for maintaining the current budget, it could simply be ignored. Otherwise it could easily be balanced by cutting badly managed defense spendingor simply veto $1.7 trillion the Pentagon wants to develop a new generation of nuclear missiles. Other options include lifting the income cap on payroll taxes or imposing a financial transaction tax — all policies that would in any case benefit the state coffers. And that’s before we even get to more difficult but politically necessary proposals, like raising the all-time low marginal tax rate.

But the question of financing can come after the cancellation of the debt. To date, the Compromise and Settlement Clause has been very narrowly enforced, but there are virtually no legal or regulatory restrictions on the extent of its application. This leads to the strategic advantage of making student debt cancellation a top priority for a Sanders administration: Most of Sanders’ proposals require new legislation, but even a Democratic-controlled Congress is unlikely to support the Sanders’ legislation as proposed without meaningful action. pressure from below.

From eliminating the cash bond to tuition-free college to medicare for all to raising the minimum wage, some moderate Democrats and conservatives will join Republicans in opposing a pro-working class legislation. Others will try to undermine it from within, perhaps conceding that the ideas are good in theory while insisting that they be applied in a narrow, bureaucratic and means-tested way rather than one way a supportive and class-wide manner.

Because it requires no legislation, eliminating student debt would be an important quick win for a Sanders administration likely to face stiff bipartisan opposition in Congress. But beyond giving the impression of pro-Sanders momentum in the press, canceling student debt has the potential to galvanize millions of workers.

People who thought they couldn’t afford to have kids would have a huge obligation on their backs — thanks to President Sanders. People whose loan-damaged credit scores prevented them from buying a home, or who couldn’t even think of saving for a down payment until they had paid off their loans would be set free – thanks to President Sanders. People would be freed from crushing jobs and free to pursue more fulfilling but less lucrative occupations – thanks to President Sanders. People who haven’t saved anything for retirement could put the money they resentfully pay Navient into a nest egg — thanks to President Sanders. $1.5 trillion would be used to stimulate the economy rather than go back to a government that doesn’t need it via for-profit loan managers that shouldn’t exist — thanks to President Sanders.

By relieving millions of people of thousands of dollars in debt each, Sanders would directly demonstrate what his brand of “social democracy class strugglemeans in practice. It would show that these ideas are not abstract and distant, but practical, material and immensely beneficial. And he would earn the loyalty of millions of Americans by freeing them from a huge financial burden – many of whom would be newly prepared to join the fight as he prepared for the big legislative battles to follow.

How would those millions feel when they got their first taste of financial freedom, presented with the rhetoric of class solidarity — when they saw that Sanders’ government was really looking for people like them? What could Sanders do with those millions ready to fight alongside him?