Sen. Bernie Sanders introduced an ambitious plan this week to cancel all student loan debt. It would eliminate close to $1.6 trillion in debts in the U.S., owed by more than one-third of young Americans to private banks, colleges, and the government. The amount owed exceeds the amount owed in credit card debt and auto loans.
Sanders, one of the Democratic front-runners, wants to fix that. The College for All Act would cancel the student loan debt of nearly 45 million Americans who pay an average of $3,000 per year and subsidize college tuition for low-income individuals underrepresented in certain districts. In total, this plan would cost $2.2 trillion, paid for by new taxes on Wall Street: A 0.5% tax on stock trades (or 50 cents for every $100 stock value), a 0.1% fee on bonds, and a 0.005% fee on derivatives. According to Sanders, these taxes would raise more than $2.4 trillion in the next ten years.
Similarly, Sen. Elizabeth Warren’s student loan debt forgiveness plan would be funded by a new tax on ultra-billionaires.
As a recent college graduate paying off student loan debt, Sanders’s plan sounds great to me in theory. But if applied, it would create a new kind of inequality among graduates from varying educational backgrounds with differing degrees of debt, and it would be very unfair to those who have been consistently paying off their student loans for years.
Student loan payments depend on several variables: the number of years spent in school, salaries, and the prioritization of expenses, to name a few. Those who struggled to pay their debt on an entry-level salary, often at the expense of leisurely pleasures like eating out and traveling, will justifiably feel cheated out of Sanders’s government bailout.
Cancellation of all student debt would create an even greater imbalance in higher education. It would essentially constitute a bailout for kids who already have the advantage of a costly education and better job prospects than everyone else in their peer group. And what about those who chose to attend smaller community colleges due to financial stress? They would look at their peers, who chose to attend more expensive universities, with a warranted spite.
And it goes without saying that those now at age 35 and above who had to make their way in the world without the advantages of college will notice that they are now paying for someone else to pass them by. They will justifiably complain that the system was rigged against them.
America is a country built by individuals, and its economic and political systems represent that. We work for our keep and oppose head starts and reject unfair benefits that we did not receive ourselves. Like so many other progressive policies, Sanders’s plan underestimates the extent to which this perfectly reasonable attitude still exists. It is just as prevalent as it was when Alexis de Tocqueville first wrote of Americans’ egalitarian faults.
And the great hypocrisy of Sanders’s plan, and other socialist policies like it, is that it claims fairness as its justification while doing so much to create its opposite.