Bernie Sanders has been a member of the U.S. Senate since 2007 and is the longest-serving independent senator in U.S. history. He represents the state of Vermont, where students graduate with an average of $30,651 in student loans each year. In 2016, he unsuccessfully ran for president on the Democratic ballot. In February 2019, Sanders announced that he is running again in the 2020 presidential election as a Democrat. His campaign website does not currently list any information about his platform for the upcoming presidential election.
Bernie Sanders on Student Loans & College Affordability
Sanders is well-versed on the student loan crisis plaguing borrowers and has proposed several pieces of legislation addressing higher education, college affordability, and student loans during his time as a U.S. Senator. Below, we’ll give you an overview of his College for All Act, other related legislation, and his viewpoints on student loan forgiveness.
Main Tenants of Sanders’ 2017 College for All Act
The College for All Act would do more than just make college tuition free for all students. It lays out several proposed solutions that Sanders and others believe could help relieve the economic burden associated with attending college. The following information comes from Senator Sander’s proposed bill, the College for All Act (2017).
- Eliminate Tuition Fees for Households Earning $125,000 or Less
The main tenant of the 2017 College for All Act calls for free tuition and fees at public colleges and universities and higher education institutions run by tribes. Unlike Sander’s previous College for All Act, the 2017 version specifies that only students from families making $125,000 or less are eligible. This accounts for approximately 80% of the population according to the bill. Students interested in attending community college can attend for free regardless of their income.
Tuition and fees at public colleges and higher education institutions run by tribes amount to approximately $70 billion per year. Senator Sanders’ bill splits the responsibility for the funding between the state and the federal government. The federal government would pay 67% of the $70 billion figure—$46.9 billion per year. The rest of the money (33%) would come from the states—$23.1 billion per year.
The bill would hold states and public higher education institutions accountable because the federal funding is also contingent upon the states following certain requirements. These rules include stipulations like reducing reliance on adjunct faculty and maintaining need-based aid spending. None of the federal money can be used to pay administrator salaries, award merit-based financial aid, or for the construction of non-academic buildings like cafeterias, student centers, or sports facilities.
- Restoring Low-Interest Rates
Sanders firmly believes that the federal government should not be making a profit on student loans. In the text of the bill, it’s stated that that the federal government is projected to accumulate $70 billion in profit off the student loan program by 2027. To reduce federal government profits on student loans, Sanders calls for interest rate deductions for all federal loans.
Student loan interest rates were much lower prior to 2006. That was the year the federal government changed the formula used by Congress to set student loan interest rates. Sanders proposes that the government return to the old formula, which would essentially cut interest rates in half for undergraduate students. It would also place a cap on interest rates so that undergraduate student loan interest rates never exceed 5% and rates for graduate loans would never exceed 8.25%. For comparison, undergraduate student loans have a 5.05% interest rate for the 2018-2019 school year.
Students who do need to borrow money to attend college—to cover costs like room and board or to attend a private college—would significantly benefit from this action. Cutting student loan interest rates in half would save borrowers a lot of money. An undergraduate student taking out a $3,500 subsidized loan for the 2018-2019 school year will pay $965 in interest by the time the loan is paid off in 10 years. With a lower interest rate, this same student would only owe $478 in interest.
- Overhauling the Refinancing System
Sanders also wants to help borrowers who have already borrowed money from the federal government. He wants to do this by overhauling the way that refinancing student loans works—at least at the federal level.
Right now, federal student loans come with fixed interest rates. Congress sets the rates each year, so the interest rates change from year to year for new loans. However, the rates for loans that students have already taken out remain the same for the life of the loan. Senator Sanders is proposing that students should be able to refinance their federal student loans based on the current interest rates.
Currently, when students refinance (also called consolidate) their federal student loans, the new interest rate is based on the interest rate of the students’ loans. The rate is just the weighted average interest rate of the student’s total federal student loan debt rounded up to the nearest 1/8th of a percent. That means that refinancing will leave you with a slightly higher cumulative interest rate. Why do borrowers consolidate if the interest is slightly higher? Federal consolidation gives you access to income-driven repayment plans and the Public Service Loan Forgiveness Program, which is why so many borrowers want to do it.
With Sanders’ plan, student debt holders could potentially refinance federal loans at a much lower rate. This is especially true given that he wants the government to significantly lower federal student loan interest rates.
- Reduce Reliance on Student Loans for All Students
The College for All act also includes provisions to ensure that students who would normally need to take out loans to cover expenses like books and room and board have other options.
- Pell Grants
Students who receive Pell Grants can use them to cover tuition and fees, room and board, and other related college expenses. The bill reiterates that low-income students who receive Pell Grant should still be allowed to use the grant money to cover costs beyond just tuition like housing, the cost of books, transportation, and supplies.
- Full-Rides for Low-Income Students
On average, room and board at a public university costs more than tuition. This means students who qualify for free tuition would still need money to cover the cost of living. The College for All Act requires that participating states and tribes must cover the full cost of college (think full ride) for their poorest students. This would be the amount left over after accounting for the free tuition and any grant money the student receives.
- Dollar-for-Dollar Match
States and tribes that want to do more than just eliminate tuition and fees can participate in a dollar-for-dollar match program. For every dollar that the state spends on additional projects like reducing the cost of room and board, hiring new faculty, or increasing academic opportunities, the federal government will give them a dollar.
- Work Study
Work study is another form of federal aid currently available to students. Nearly 700,000 students receive guaranteed jobs on their college campus. Typically, these jobs end up paying students $1,670 per year. Students can put the money directly toward tuition or use it to cover other expenses.
In the bill, Sanders proposes tripling the investment in work study programs to make federal work study available to 2.1 million students. The bill focuses on increasing the funding for schools with large numbers of low-income students so that these students aren’t as reliant on student loans.
- Reduce Tuition at Selected Private Colleges
The bill’s free tuition proposal is only applicable for students attending a four-year public college or two-year community college. However, it makes some exceptions for students attending private colleges. The act would set aside $1.3 billion each year to make tuition and fees free or reduced for low-income students attending private nonprofit Historically Black Colleges and Universities (HBCUs) and Minority Serving Institutions (MSIs). Eligible colleges must also have a student body with at least 35% low-income students. Based on current enrollment, the bill estimates that 200 colleges would be eligible.
- Fund TRIO and GEAR UP Program
Under this bill, the TRIO Program would receive double their current funding and GEAR UP Programs would receive an increase in funding. Both of these programs assist first-generation, disabled, and low-income students with enrolling in college and graduating from college. Funding used by these programs would go toward providing services in middle schools and high schools, awarding grants, and providing scholarships to low-income students.
- Paid for by Wall Street
Student loan debt and access to college is a big crisis in America. Solving the crisis and instituting a plan like Senator Sanders’ requires an additional income stream aside from preexisting business and income taxes. Bernie Sanders proposes that these funds come from a “Wall Street speculation fee on investment houses, hedge funds, and other speculators of 0.5% on stock trades (50 cents for every $100 worth of stock), a 0.1% fee on bonds, and a 0.005% fee on derivatives.”
The bill claims estimations show that this proposed funding method could meet the estimated $600 billion cost of the legislation over the next decade. The chosen method of funding for this bill has received the most contention from the public and political officials. However, the bill points out that this tax is very similar to a financial transactions tax that 40 other countries currently impose. These countries include Britain, Germany, South Korea, Switzerland, Brazil, and France.
Bernie Sanders on Student Loans: Other Views & Legislation
The College for All act embodies many of Bernie Sanders’ views regarding student loans. However, it doesn’t include everything that he’s ever had to say on the topic. He’s also used his position as a U.S. Senator to support other legislation and share his viewpoints on matters that do/could make college more financially attainable for students.
Veterans Education Benefits
More than a decade ago, Sanders was the co-sponsor and key supporter of the Post 9/11 GI Bill. This bill significantly expanded Veterans’ education benefits. The bill, which was signed into law on June 30, 2008, grants all veterans who have served since 9/11 free tuition, room, and board. All veterans who serve three years are eligible for the full benefit regardless of their income or finances.
The full benefit is $90,000 to put toward their education, which covers 100% of tuition, room and board, and fees for a four-year degree in most cases. If a veteran already has a college education or doesn’t want to attend college, the benefit can be transferred to their spouse or children.
Dual Enrollment for High School Students
In 2014, Bernie Sanders cosponsored a bill with Senators Patrick Leahy and Chris Murphy that would expand dual enrollment programs for high school students. Dual enrollment programs make it possible for high schoolers to take college-level courses and earn both high school and college credit. In most cases, students participate in dual enrollment for free or at a significantly reduced cost per credit. Students participating get a head start on college, enabling them to graduate from college in less time and with less debt.
Colleges throughout the country offer dual enrollment programs, but the proposed bill would make these programs more accessible and more prevalent. In particular, the bill’s sponsors believe that the program would increase college enrollment of low-income students. Aside from information about the proposed bill’s purpose, there are no updates on the bill available at this time.
In 2015, Bernie Sanders spoke to students at American University about his thoughts on making public higher ed tuition free. He told the students that he wants to expand the Pell Grant program so that college is more affordable. Sanders also spoke out against a proposed budget that would eliminate $90 billion in Pell Grants over a ten-year period.
The 2017 College for All Act adds more details and more ideas to Sanders’ original bill in 2015. However, the new bill leaves out Sanders’ plan to simplify the FAFSA process. Here’s Sanders’ original plan from the 2015 bill:
Sander’s final idea for student loan reform in his 2015 bill focused on the Federal Application for Financial Aid (FAFSA). Sanders proposed starting a pilot program where students only have to file their FAFSA one time during their college career. This would make applying for financial aid less stressful for families. Under the current system every college student is encouraged to file a FAFSA before the beginning of every school year. Students have to file every year to remain eligible for federal financial aid.
Sanders is a strong supporter of the students filing a FAFSA and is passionate about educating students about it because in Vermont, his home state, approximately 40% of students don’t file a FAFSA. These students collectively miss out on $4.6 million each year according to NerdWallet. Students don’t fill out a FAFSA for a number of reasons, but Sanders hopes that by making the FAFSA a once-and-done deal, more students will file.
As of March 2019, a few other senators have moved forward with a new legislation proposal that echoes Sanders’ plan to simplify the FAFSA.
Bernie Sanders on Student Loan Forgiveness
Bernie Sanders hasn’t made any official campaign statements about grand plans for student loan forgiveness. As a member of the HELP committee, he does makes it clear that he believes the existing forgiveness programs should be carried out promptly because student loan debt is burdensome for the individual and bad for the economy.
Here are a few of the specific measures that he’s made public statements about:
Borrower Defense Rule
The federal government offers student loan discharge to people facing difficult circumstances like total and permanent disability or a closed school. It also awards discharge to borrowers who were defrauded by colleges. In 2016, the borrower defense rule was updated to give borrowers in that situation more relief options. As of December 2018, more than 139,000 claims are pending.
In February 2019, Sanders and others wrote a letter to Secretary of Education Betsy DeVos addressing the backlog of federal student loan discharge requests made by these borrowers. Sanders strongly believes that the borrow defense rule should be enforced and that borrowers with pending claims receive prompt communication about the status of their claims.
Public Service Loan Forgiveness
In the fall of 2018, the first public service employees were eligible to apply for the Public Service Loan Forgiveness Program (PSLF). Under this program, individuals who work for a qualifying organization or the government can have their entire federal student loan balance forgiven. Approximately 28,000 borrowers applied for the program during the same week but only 96 had their loans forgiven.
Bernie Sanders signed a letter written to Betsy Devos on October 16, 2018. The letter expresses senators’ frustrations with the implementation of the PSLF program and calls for an overhaul of the system to ensure that qualified applicants have their loans forgiven. It also requests that the process for all applicants moving forward is simpler and more organized.
In his proposed 2020 budget, President Donald Trump cuts $207 billion from college affordability programs over the next ten years. This would include eliminating the Public Service Loan Forgiveness Program. In March of 2019, Bernie Sanders released a statement on his senatorial website speaking out against the proposed budget cut because he still supports Public Service Loan Forgiveness.
Summary of Bernie Sanders on Student Loans
In a nutshell, here are Bernie Sanders’ main views regarding student loans and the cost of college:
- College should be free for all students
- The government should not be profiting off student loans
- Pell Grant funding should be increased for low-income students
- Existing borrowers should be able to refinance their loans at a lower rate
- Work study programs should be expanded at all colleges and universities
- Wall Street should cover the costs of higher education reform, not college students
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College Ave: College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
College Ave Refi Education loans are not currently available to residents of Maine.
1 – The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation.
2 – $5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. Information advertised valid as of 04/26/2019. Variable interest rates may increase after consummation.
3 – This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.