Washington – Millions of Americans no matter their family income would see all college debt wiped out under a proposal Monday by Vermont Sen. Bernie Sanders and U.S. Rep. Ilhan Omar.
Sanders, a Democratic candidate for president and Omar, a Democrat from Minneapolis, propose clearing some 45 million Americans of a cumulative $1.6 trillion in unpaid college loans. It would be funded by a tax on Wall Street speculation.
Critics, including Minnesota U.S. Sen. Amy Klobuchar, also a presidential candidate, call the plan unrealistic and unaffordable. But backers say students are drowning in debt through no fault of their own.
"Student debt is not the result of bad choices or behavior," Omar said at a Capitol Hill news conference with Sanders and several House colleagues. "It is the result of a system that tells students to get an education and go to college in order to have a stable life, but then does not provide the resources to afford that education."
In proposing a massive bailout of college debtors, along with free public college tuition, Sanders is positioning himself firmly to the left in the increasingly competitive Democratic presidential contest, in which the cost of college has become a major issue.
One of his rivals, Sen. Elizabeth Warren of Massachusetts, also has proposed college loan forgiveness, but her plan would be more limited, based on the income of the debt holder.
Klobuchar, running as a pragmatic Democrat, has questioned the financial sustainability of debt forgiveness and free college proposals. "I wish I could do that, but I have to be straight with you and tell you the truth," Klobuchar said in April on CNN.
Klobuchar has proposed free community college, as well as larger Pell Grants. She also favors allowing students to refinance loans at more favorable interest rates.
The average student graduating from a public or private nonprofit four-year college in 2017 carried $29,650 in debt, according to a study by the Institute for College Access & Success. In Minnesota the average was higher, at $31,734. The state ranked ninth in the nation in student debt.
A spokesman for Omar stressed that her appearance with Sanders on Monday did not constitute an endorsement of his presidential bid. Omar has spoken frequently about college affordability during her time in the state Legislature and Congress.
Omar has not yet gotten behind a candidate in the Democratic race; a number of other high-profile Minnesota Democrats are on board with Klobuchar, including Sen. Tina Smith, Gov. Tim Walz and U.S. Reps. Angie Craig and Dean Phillips.
The hefty price tag on Sanders' full proposal — $2.2 trillion over a decade — guarantees tough political resistance. The funding would come from taxes on things like stock trades, bonds and derivatives.
"The American people bailed out Wall Street" following the 2008 financial crisis, Sanders said. "Now it is time for Wall Street to return the favor to help the middle class."
Under the proposal, all college debt would be immediately forgiven. Proponents say that freeing students of that obligation would deliver an immediate positive jolt to the economy.
Warren, by contrast, would fund free college, universal child care and a more modest debt-elimination plan with her proposed tax on wealth — a 2% fee on fortunes greater than $50 million.
Sanders defended extending loan forgiveness to all Americans regardless of income. "I believe in universalism," he said.
The Democratic candidates for president meet for their first debates this Wednesday and Thursday night. Klobuchar and Warren will be part of the Wednesday night debate, while Sanders, former Vice President Joe Biden and others are the following night.