This Is How Bernie Sanders Will Pay For $1.6 Trillion Of Student Loan Forgiveness

Bernie Sanders (I-VT)

Sen. Bernie Sanders (I-VT) (Photo by Sean Rayford/Getty Images)

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Here’s how Bernie Sanders will pay for $1.6 trillion of student loan forgiveness.

Here’s what you need to know.

Student Loan Forgiveness

Sanders wants to forgive all $1.6 trillion of outstanding student loan debt, including both federal and private student loan debt. Sanders’ student loan forgiveness plan has no eligibility requirements; all 45 million student loan borrowers are eligible for student loan discharge.

Sanders believes that among other benefits, student loan forgiveness would help millions of borrowers lead a better financial life and stimulate the economy. For example, student loan forgiveness can help borrowers buy a home, save for retirement, launch new businesses, and start a family; and reduce the wealth gap and provide economic stimulus to the middle class.

So, how will Sanders pay for his student loan forgiveness plan?

Cancel Student Loans Plan: How Sanders Will Pay

Sanders says that his tuition-free public college plan and his student loan forgiveness plan will cost an estimated 2.2 trillion. To pay for these plans, Sanders would institute a “Wall Street speculation tax” that will raise an estimated $2.4 trillion over the next ten years. The “speculation tax” would work like this: a 0.5% tax on stock trades, a 0.1% fee on bond trades, and a 0.005% fee on derivative trades. For example, if $100 of stock is traded, the “speculation tax” would be $0.50.

Tuition-Free College: As president, Sanders also wants Congress to pass the College for All Act, which would provide at least $48 billion per year to eliminate tuition and fees at four-year public colleges and universities, tribal colleges, community colleges, trade schools, and apprenticeship programs.

Student Loan Forgiveness: Sanders says student loan forgiveness will grow the economy by $1 trillion over the next 10 years and create up to 1.5 million new jobs every year. (Moody’s believes the economic impact would be more muted). He also says that the average student loan borrower will save around $3,000 a year in student loan payments. 

Most other leading presidential candidates from former Vice President Joe Biden to former New York City Mayor Michael Bloomberg to President Trump do not support massive student loan forgiveness. These candidates believe, among other reasons, that the cost to taxpayers would be too expensive. Instead, candidates such as Biden, Bloomberg and Trump have advocated improving the current income-driven repayment plans to simplify student loan repayment and improve student loan forgiveness through this mechanism.

Your Next Action Steps

As presidential candidates debate the future of student loans, make sure to understand all your options for your student loan repayment.

Here’s a good place to start:

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