This Is How We Will Cancel All Student Debt
Read a fact sheet on College For All here.
Read the legislative text here.
Read a fact sheet on the Inclusive Prosperity Act to raise revenue for the proposal here.
I don’t often use this phrase but we are, in fact, offering a “revolutionary” proposal — a proposal that will transform and improve our country in many ways.
In a highly competitive global economy, when we need the best educated workforce in the world, this proposal will make it possible for every person in America to get all of the education they need regardless of their financial status. This means not only a college education but the right to enter a trade school or apprenticeship program to acquire the skills needed to become a carpenter, plumber, sheet metal worker or many of the other important jobs that keep our society going.
In other words, we will make a full and complete education a human right to which every American are is entitled. This means making public colleges, universities and HBCUs tuition free and debt free by tripling of the Work Study program, expanding Pell Grants and other financial incentives.
Further, in the wealthiest country in the history of the world, it is simply not acceptable that our younger generation, through no fault of their own, will have a lower standard of living than their parents — more debt, lower wages and less likelihood of owning their own homes.
That is why this proposal completely eliminates student debt in this country and ends 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.
Ten years ago the U.S. government bailed out Wall Street after their greed, recklessness and illegal behavior drove us into the worst recession in modern history. Today, the major Wall Street banks are larger than ever, their profits are soaring and their CEOs revive huge compensation packages. Our proposal, which costs $2.2 trillion over ten years, will be fully paid for by a tax on Wall Street speculation — similar to what exists in dozens of other countries. The American people bailed out Wall Street, now it is Wall Street’s time to help the working families of this country. This Wall Street tax will have the added benefit of controlling Wall Street recklessness and reducing the likelihood of another major economic crash.
In 1944, as World War II was coming to an end, the U.S. government did the right thing and passed the GI 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 an entire generation, the Greatest Generation, but it also laid the groundwork for a great expansion of the American middle class.
In the 1960s and 1970s, the federal government and state governments invested heavily in higher education with the result that college tuition was virtually free for millions of young people.
Forty years ago, a federal Pell Grant paid for nearly 80 percent of tuition, fees, room and board at a four-year public college.
Well, sadly, things are different today. Today, it costs over $21,000 each and every year to attend some of those very same schools which 50 years ago were virtually tuition free. Today, Pell Grants cover only about 30 percent of college expenses.
And here are the results of federal and state higher education cutbacks.
Today, the average college senior graduates with about $30,000 in student debt and one out of six seniors will graduate with over $50,000 in debt. The situation is even worse for African American and Latino families. And, at a time when we are in desperate need for more doctors, dentists, and nurses many young people are leaving medical school, dental school or nursing school hundreds of thousands of dollars in debt. And here’s a sad truth. Many students drop out of college because of the cost after accumulating significant debt, and don’t even have a degree to show for their efforts.
Let’s be clear. The millennial generation was told that the only way they would get the good jobs available is if they received a college education. That turned out to be dead wrong.
Since 2000, the cost of attending a public college has nearly doubled. Meanwhile, the bottom 60% of college graduates earn less money than those who graduated college did 19 years ago and wages for the average college graduate have stagnated.
Today, 34% of Americans 25 and older have a college degree, but only 26% of jobs in our country require a college education.
The result is that many millions of young people today are forced to work at low wage jobs, their standard of living is going down, while they are struggling to pay off their outrageously high level of student debt.
The bottom line is we should not be punishing people for getting a college education.
It’s time to hit the reset button.
Under the proposal that we are introducing today, all student debt would be cancelled within 6 months.
By taking this action, we will not only provide immediate financial relief to 45 million Americans who have $1.6 trillion in student debt, we will be improving the entire economy.
According to a study from the Levy Institute, cancelling all student debt would add an estimated $1 trillion to our economy over the next decade and it would create up to 1.5 million jobs a year.
Let me conclude by telling a tale of two crises. In 2008, we bailed out Wall Street to the tune of trillions of dollars after they themselves had caused the crisis.
But today we have ignored the economic distress of millions of Americans who through no fault of their own are now deeply in debt.
It’s time to pay attention to their needs. It is time to act.
It is time to cancel student debt.
It is time to make public colleges and universities tuition free and debt free.
It’s time to create an economy that works for all of us, not just the people on top.
Here’s how the College for All Act works:
Eliminates tuition and fees at public four-year colleges and universities and makes community college tuition- and fee-free for all
The College for All Act would provide at least $48 billion per year to states and tribes to eliminate undergraduate tuition and fees at public colleges, universities, and institutions of higher education controlled by tribes. Under this bill, students from any family would be able to attend a public four-year college or university, or four-year tribal college or university, tuition- and fee-free. All students, regardless of income, would also be able to attend community colleges, trade schools, or apprenticeship programs tuition- and fee-free.
Under the College for All Act, the federal government would cover 67 percent of the cost of eliminating tuition and fees at public colleges and universities and tribal institutions of higher education. States and tribes would be responsible for eliminating the remaining 33 percent of the costs.
To qualify for federal funding, states and tribes must meet a number of requirements designed to protect students, ensure quality, and reduce ballooning costs. States and tribes will need to maintain spending on their higher education systems, on academic instruction, and on need-based financial aid. In addition, colleges and universities must reduce their reliance on low-paid adjunct faculty.
No funding under this bill may be used to fund administrator salaries, merit-based financial aid, or the construction of non-academic buildings like stadiums and athletic facilities.
Cancels $1.6 trillion in student debt for 45 million Americans
About 45 million Americans owe nearly $1.6 trillion in student loan debt. As part of the College for All Act, we will cancel student loan debt for all of them within six months. Under this proposal, the average student loan borrower would save about $3,000 a year. The economy would get a boost of approximately $1 trillion over 10 years, which could be used to buy new homes, cars, and open up small businesses. Student loan debt is causing severe economic pain to millennials.
Ensures students can attend college debt free
This bill:
- Ensures low-income students getting a Pell Grant can use this aid for books, housing, transportation, and the other costs of colleges.
- Requires states and tribes participating in the College for All Act to cover the full cost of college for their poorest students — typically those students from families with incomes less than $25,000 — filling in the cost gap that may remain after the elimination of tuition, fees, and grants.
- Caps student loan interest rates at no higher than what the federal government pays for its debt — 1.88 percent, compared to student-loan interest rates as high as 8.5 percent. In other words, this bill would end the absurdity of the government profiting off of student loan programs.
- Provides a dollar-for-dollar match for states and tribes that provide extra funding to reduce the cost of college beyond eliminating tuition and fees. States and tribes would also be able to use funding to increase academic opportunities for students, hire new faculty, and provide professional development opportunities for professors.
- Triples our current investment in the Work-Study Program, which provides an average award of about $1,760 a year, so that it can reach about 2.1 million students (1.4 million more than today) and focuses funding on schools that enroll high numbers of low-income students.
Eliminates or reduces tuition and fees for low-income students at private colleges and universities that serve historically underrepresented minorities
This bill provides at least $1.3 billion per year to eliminate or significantly reduce tuition and fees for low-income students at two- and four-year, private nonprofit Historically Black Colleges and Universities (HBCUs) and private nonprofit Minority Serving Institutions (MSIs) that serve a student body that is composed of at least 35 percent low-income students. About 200 schools would be eligible to participate.
Provides funding to eliminate equity gaps in higher education attainment
This bill doubles funding for the TRIO Programs and increases funding for the GEAR UP Program so more first-generation and low-income students can enroll in and graduate college. This means that TRIO Programs would reach 1.5 million students and GEAR UP would reach over 100,000 more students than it currently does.
Paid for by a tax on Wall Street speculation
The estimated $2.2 trillion cost of this bill would be paid for by a tax on Wall Street speculation. During the financial crisis, Wall Street received the largest taxpayer bailout in the history of the United States. Now, it’s Wall Street’s turn to help rebuild the disappearing middle class. By imposing a small Wall Street speculation tax of just 0.5 percent on stock trades (that’s just 50 cents for every $100 worth of stock), a 0.1 percent fee on bonds, and a 0.005 percent fee on derivatives, we would raise up to $2.4 trillion over the next decade. More than 1,000 economists have endorsed a tax on Wall Street speculation and some 40 countries have already imposed a similar financial transactions tax, including Britain, Germany, France, Switzerland, South Korea, Hong Kong, and Brazil.
Economists estimate that the full amount of this tax would be borne by the financial industry, not individual holders of stock or pension funds. The industry would be no less effective in allocating capital after the tax is imposed. A Wall Street speculation tax is widely recognized to reduce waste and inefficiency in the financial sector.
