Apparently cancelling all student debt under Sanders’s plan would cost $1.6 trillion, and would be funded by a wealth tax. $1.6 trillion is a lot of money. Sara Goldrick-Rab gently says: “There’s a piece of me that has seen how widespread the pain is, including among people you might say are financially fine. But there’s a piece of me that knows what the pot looks like, and says, ‘That’s not the best use of the money'”.
Think about other uses: There are about 100,000 public (k-12) schools in the US. I’ve tried dividing $1.6 trillion by 100,000 several times now and every time I do it the answer is $16 million (I find math using ‘billions’ and ‘trillions’ difficult, because the words have different meanings in UK and American English, and I’m not always confident which language my head is in. So maybe I’m off?) $1.6 trillion could endow every public school in the country with, or give a one-off capital grant of, an average of $16 million. An average endowment of $16 million per school would yield $800,000 in additional spending per school in perpetuity. Another way of thinking about this. There are 51 million public school children. $1.6 trillion yields about $31k per student. Create an endowment and you can spend $1.5k more per student in public schools than we currently do. Forever.
(Co-incidentally, if the government did spend $1.5k more per student per year in public schools, that would almost bring government spending per-student per year in k-12 up to the level of government spending per-student per-year in higher education!)
Another way of thinking about it. Sanders’ main spending proposal in k-12 is tripling Title One spending (Federal funds that go to schools with low income children in them). Title One spending is currently around $14 billion. (He adds $1 billion for magnet schools and unspecified amounts for universal free school meals, and for a few other things, which I’ll leave aside). Divide 1.6 trillion by 14 billion and you see that he’s proposing to spend 100 years of current Title One funding on a one-off cancellation of student debt. He could quadruple title one spending for 100 years instead. Or quintuple it for 50 years. Or sextuple it for 25 years. He’s proposing to spend 50 times more just on relieving student debt than to increase annual Federal spending in k-12.
Or: restrict your concern to access to higher education. $1.6 trillion would pay the current Pell Grant budget for 50 years. Another way of putting this: Endow the Pell Grant program with $1.6 trillion, and that pays for Pell Grants at 2.5 times the current rate. Forever.
Some defenders say that debt forgiveness would be good for the economy.
Student debt forgiveness would also help stimulate economic growth by freeing borrowers to buy homes and improve their credit, while primarily benefiting racial minorities, according to Steinbaum and researchers at the Levy Institute, a left-leaning think tank.
Omar, who has student debt, said in a statement that the plan would “unleash billions of dollars in economic growth.”
If the point of the plan is reducing debt loads, rather than being about education, why is the plan specific to college loan debt? People who didn’t go to college have debt too: and have worse earning prospects. Is there some evidence that cancelling student debt (a good deal of which is held by high earners) is better for the economy than cancelling other kinds of debt. Or just lowering the costs of living for low income families by, for example, enabling them to purchase new and efficient automobiles that have lower running costs than older cars that they currently buy because they are cheaper? $1.6 trillion would buy $53 million Chevy Volts, reducing automobile running costs for 53 million low income families. Or one could address the massive wealth gap between African Americans and whites by biting the reparations bullet: a mortgage down payment of $34k for every single African-American would increase dramatically home ownership among African Americans. Or whatever.