An education policy analyst says Bernie Sanders' proposal to erase $1.6 trillion in student loan debt really offers no solution to the current situation brought about by failed federal policies.
The Independent senator from Vermont isn't the only candidate among those seeking the Democratic presidential nomination who is pushing a plan for loan forgiveness. Senator Elizabeth Warren (D-Massachusetts) introduced a plan in April that would forgive about $50,000 of student loan debt for individuals at certain income levels. The Sanders plan, however, would eliminate every dollar of students' loans with no income requirements.
"We shouldn't be encouraging more students to go into this very limited system," says Mary Clare Amselem, a policy analyst at The Heritage Foundation. "We should be talking about alternatives to college; we should be talking about financing alternatives – [but] unfortunately what we're seeing from Senator Sanders is more of a doubling down on exactly the failed federal policies that have gotten us into this mess in the first place."
To pay for his plan, Sanders would put a tax on speculation from major Wall Street banks, something the self-proclaimed Democratic Socialist claims would raise more than $2 trillion over 10 years. However, Amselem warns these types of taxes do not generate as much revenue as predicted.
"Here at The Heritage Foundation, we have argued that these types of taxes will increase market volatility," she adds. "It will hurt traders and people who want to be involved in our economy. The economy is doing fantastic right now, and that's encouraging more people to get involved in the stock market …. Bernie's proposal would be putting a tax on those trades – and that's not good for the economy in general."
Amselem expressed criticism of Senator Warren's plan in an earlier interview with OneNewsNow. As with Sanders' plan, she argued in April that Warren's plan to eliminate student loan debt doesn't get to the root of the problem – which is that with private lenders only holding a ten-percent market share (and the federal government holding 90 percent), there is no space for them to compete and offer competitive rates for students. Warren, however, has blamed "greedy student loan companies" for the student loan mess.
Another problem with Warren's proposal, according to Amselem, is that the cost for it will eventually "trickle down" to middle-class Americans. She also points out that Warren is proposing a wealth tax to pay for her proposal – a tax that Amselem contends will fall far short of what is needed.
"This same pot of money has been promised to a number of other massively expensive programs, one of which is providing free public college for all Americans and free childcare," she notes. "And so this pot of money will not cover all of these promises that we're seeing."