At the presidential debates in Detroit on Tuesday, Sen. Amy Klobuchar went after Bernie Sanders’ and Elizabeth Warren’s college debt forgiveness proposals, calling them plans that pay for Wall Street kids to go to college.
Both Senators Warren and Sanders want to eliminate tuition at public colleges and universities. They view debt forgiveness as the way to address the more than $1.5 trillion student debt crisis. Sanders’ “College for All Act” would make four year public colleges and universities tuition free and would erase student debt for an estimated 45 million Americans by imposing new taxes on Wall Street transactions: 0.5% tax on trading a stock, 0.005% tax on derivatives, and 0.1% tax on bonds trades. Warren’s proposal would eliminate $50,000 in student loan debt for households with less than $100,000 in income.
“My problem with some of these plans is they literally would pay for wealthy kids, for Wall Street kids, to go to college. There's no difference. It says everyone is free,” said Klobuchar. “I want to make it easier for kids to go to college. And I think we do it by focusing our resources on the people that need it most,” she said.
In an effort to prevent the children of wealthy Wall Street investors from benefiting from free college, Klobuchar is pushing a plan that enables graduates to refinance their current student loans but at lower interest rates.
“What I would do about student loan debt is that I would allow people to refinance it at a better rate, and I would make sure that we improve those student loan repayment programs for our teachers and expand them so that you literally -- over 5, 10 years -- can get it paid for if you go into occupations where we don't have enough workers,” Klobuchar said.
Undergraduates currently face a 4.53% interest rate for federal subsidized student loans, but rates for private loans can exceed 10%. Other Democrats at the debate have also discussed helping graduates refinance loans at lower rates. Sanders included it in his College for All Act; former Gov. John Hickenlooper has discussed a 2.5% rate; and Beto O’Rourke has pushed for a 3.4% rate.
Other candidates who weren’t on stage Tuesday night have also mentioned refinancing, including New York Sen. Kristen Gillbrand, who proposed a rate of 4% in 2013 legislation.
Mayor Pete Buttigieg has talked about the need for refinancing and has not been shy about his own student loan debt obligations. At the first Democratic debates, he said he and his husband are still paying off their six-figure student debt. When asked why he wouldn’t be in favor of Sanders’ plan, Buttigieg said that it wouldn’t be fair. “That would be great for us. And then the next day, there would be a student loan program and people would be out taking student loans wondering why they weren't lucky enough in timing to get theirs wiped away completely, too,” he said.
Paying for the plans
Sanders has not given an exact timeline or deadline for when student debt would be erased under his plan. The College for All Act proposes long-term structural changes to how tuition costs of four-year public colleges and universities are addressed.
Regardless, Buttigieg described his plan as a more permanent solution. “We can have debt-free college for low- and middle-income students by expanding Pell Grants and compelling states to pick up more of the burden. And on the back end, for those of us who do have a lot of debt, we can make it more affordable and we can expand a public service loan forgiveness program, which is an excellent program that is almost impossible to actually get access to right now,” he said.
Warren views her debt forgiveness plan as a means of addressing the racial wealth gap in America. “My plan has universal, tuition-free college for all of our kids, but also increases the Pell Grants and levels the playing field by putting $50 billion into historically black colleges and universities,” she said. “It cancels student loan debt for 95% of the kids with student loan debt and helps close the black-white wealth gap in America.”
Warren plans to pay for her free college and debt forgiveness plan – which comes with a steep $1.25 trillion price tag – through a multimillionaire tax; she’d impose a 2% tax on households with income above $50 million and an additional 1% tax on billionaires.
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