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Serving in Congress since 1990, Bernie Sanders has worked tirelessly to improve the lives of all Americans through various means, including financial assistance initiatives for vulnerable populations. Sanders has been on a number of committees that show his dedication to the issues, including Veterans’ Affairs, the Senate Budget Committee, Environment and Public Works, Energy and Natural Resources, as well as the Health, Education, Labor, and Pensions Committee.
In Congress, Bernie Sanders has pushed for financial assistance for many Americans, including college students. There is a student debt crisis in this country with many students taking out loans they will struggle to pay back, and Sanders wants to help alleviate that burden. He has proposed several changes to the way the government handles student debt, including an Act to make college tuition free, as well as supporting the refinancing of student loans through the government (keep in mind this is different from student loan refinancing offered by private banks and lenders).
Let’s explore some of the ways Bernie Sanders wants to help college students pay for school.
The College for All Act
The main thrust of Bernie Sanders’ student debt plan is to promote more affordable higher education for Americans through the proposed College for All Act. This proposed act would use Robin Hood taxes from certain Wall Street transactions to provide funds for various programs designed to lower student debt. The Act attacks student debt by reducing tuition on one end and restructuring the federal student assistance programs on the other. The proposed CAA includes provisions for:
- The federal government paying 67 percent of state college tuition with states themselves responsible for the remaining 33 percent
- Reforming student loans by establishing low interest rates on new loans and allowing existing loans to be refinanced under new rates
- Expand the existing work-study program to allow students to work at their universities to pay off some of their tuition, reducing the need for loans
- Simplify the application process for federal student aid to make college more accessible to more Americans.
>> Read More: Student Loan Policies
How Would the CAA Make Student Loans More Affordable?
The short answer is that the proposed act would lower interest rates on student loans so it would be easier to pay them off over time. Lowering student loan interest rates is one of the more complicated aspects of the bill, so let’s break it down.
There used to be a formula in place that kept student loan rates relatively low, but in 2006, the student loan interest rate was fixed, with the average at 6.8 percent for unsubsidized Stafford loans. (To put it in perspective, this interest rate would be high for a mortgage but low for a credit card.) Since the federal government holds these student loans, a high interest rate means they actually make a profit from students which Sanders feels is morally wrong.
Bernie proposes to drop the federal student loan interest rate to the formula that was used before 2006. This would make current rates about 2.5 percent. The plan would also set measures in place to ensure that the student loan interest rate will never exceed 8.25 percent. This would allow students to pursue an undergraduate degree without worrying that they’ll never be able to pay off their loans. It would also ensure that the government isn’t profiting from federal student loans.
What About People With Existing Student Loans?
Those Americans who already have federal loans for higher education wouldn’t be left out of Bernie Sanders’ plan to lower student debt. He feels it’s not fair that students with loans would have to keep paying the old rates that are as high as 7 percent. One of the proposed parts of the College for All Act is to allow existing debtors to refinance student loans at the proposed lower interest rates of around 2.5 percent.
As part of his work, Bernie Sanders listened to college students, professors, and others in the academic world. He found their concerns about growing student debt to be valid, and he is looking to solve them with the College for All Act by drastically reducing tuition across the board, making college free for low-income students, making work-study programs more robust, reducing student loan interest rates, and allowing for the refinancing of existing student loans. These plans could go a long way to helping all Americans get access to higher education.
Author: Jeff Gitlen, CEPF®