How Bernie Sanders’ free college tuition plan would work
We analyze the components and implications of Bernie Sanders’ College for All Act.
Apr. 19, 2016
A year ago this month, Vermont Sen. Bernie Sanders announced to just a few reporters on Capitol Hill that he would run for president and outlined the issues he sought to address. In addition to issues such as climate change and income inequality, Sanders introduced his belief that tuition and cost of living at public colleges and universities should be free.
Free college has become one of the most talked about policy proposals on the campaign trail, and questions surround the policy, such as how it would work, how much it would cost and how it would affect students.
This notion of free tuition at public colleges and universities has excited and enraged voters across the country, given both rising tuition rates and national debt. The chief point of contention has been how it would be funded.
On his campaign website, Sanders details a six-point plan to eliminate student debt, including goals of:
- Ending the federal government’s practice of profiting on student loans
- Reducing the current student loan rate by about 2 percent, to its 2006 rate of 2.32 percent
- Allowing borrowers to refinance their debt to today’s lower rates
- Requiring federal, state and school aid programs to cover the entirety of housing, books and living expenses that low-income students cannot afford
How it would be funded
Sanders would “more than triple” the federal work-study program, impose a new tax on Wall Street speculation and ask states to pay a share of the cost.
This is where the controversy comes in. The Sanders campaign estimates this program would cost $75 billion, with the federal government covering two-thirds of the cost, and states covering the other third.
State proposals, such as those by Tennessee Gov. Bill Haslam, have explored proposals more in line with Democratic primary opponent Hillary Clinton’s plan to create a system of free community college, but many economic forecasters see prospects of nationwide adoption of dramatically expanded college funding by states as cloudy at best.
State higher education budgets are already tight, and the Center on Budget and Policy Priorities found that all but three states have cut spending in this area since the recession. It may be tricky to convince state governments, many of which have recently fought legislation to cover ten percent of future Medicaid expansion under the Affordable Care Act, to cover the $25 billion difference.
The federal money used in this legislation would be derived from a new tax proposed by Sanders, one referred to as a “Robin Hood” tax overseas. According to his proposal, the tax would be imposed on Wall Street speculation, transactions such as stock trades and hedge fund operations, at varying rates under 1 percent. While they came to a number vastly lower than the Sanders campaign, the Tax Policy Center upholds that the tax would generate $50 to $60 billion in new revenue, enough to satisfy Sanders’ federal funding goal.
How it would affect MU
Should Sanders win and implement this policy, it would affect both current and former Missouri students, but perhaps not as quickly as some would like. Free tuition would likely face pushback in a Republican Congress after January’s inauguration. A subsequent battle in individual states would also likely ensue, meaning implementation would take time, likely long enough that upperclassmen in January 2017 would graduate before public college would become free.
Sophomore Sam Willoh, president of Mizzou for Bernie Sanders and a recently selected Sanders delegate to the Missouri Democratic State Convention, believes Missouri students should be excited about the potential of a Sanders presidency.
“Here’s the scary part about debt: It becomes cyclical,” Willoh said. “My dad went to Mizzou for law school. He’s still paying his college debt. That is why I don’t have money from my parents to help pay for college. And then I get debt, and let’s say I can’t settle that debt by the time I have kids, it continues.”
A measure that could further reduce debt is the policy’s intention to “eliminate the requirement that students re-apply for financial aid each year, simplifying the application process and removing significant barriers faced by low-income students,” according to the proposed legislation. Students at MU and across the country would more easily access financial aid, and avoid the annual difficulties and stress that accompany the Free Application for Federal Student Aid.
Additionally, in order for states to receive the federal 2-to-1 match of tuition funding, they would have to reduce their dependence on part-time, cheaper adjunct instructors. According to the act, this would increase the education quality of every student, as full-time professors would be making higher average salaries and would be able to more fully devote themselves to their teaching careers. However, this would also mean that the federal funds would be worth less than a 2-to-1 matching ratio, as it would increase the cost of running public institutions in the process.
Student debt and interest rates
Finally, should the College for All Act take effect, current Missouri undergraduates would see their student loan interest rates drop to the aforementioned level of 2.32 percent, almost half of what these students pay now, about 4.29 percent, according to the U.S. Department of Education. Former students would also have the opportunity to refinance the remainder of their debt to this rate. The policy ensures that the rate would never rise above 8.25 percent.
Student debt has been skyrocketing in America. In 2014, 55 percent of MU graduates left with student loan debt, the average loan-bearing student owing an average of over $25,000, according to The Institute of College Access and Success. According to NPR, the college tuition rate rises two to three times the rate of inflation each year.
“So, long story short, the reason why I believe that free undergrad is necessary is because we have reached a point that an undergraduate degree is necessary to compete in the job market, and the cyclical nature of debt leads to a stratified society which is unhealthy for any form of democracy or any form of freedom within a society,” Willoh said.
Edited by Hailey Stolze | email@example.com