When the wealth of your parents largely determines your ability to go to college, that creates a system that is antithetical to our American values of freedom, democracy, and equal opportunity.
The crisis of student loan debt and rising higher education costs is unprecedented in our country’s history. As long as the U.S. government continues to capitulate on making radical reform across the board, the problem will continue to exacerbate itself.
College for All (C4A) is proposed as a solution to ensure that those who qualify for college can attend regardless of their income level. It acts as a form of a jobs program by promoting an educated workforce, which leads to a stronger economy. Wiping all student loan debt is another solution offered to help students who incurred debt that is holding them back from contributing to the economy. In fact, these two solutions must go hand in hand to fully address the crisis.
List of FAQs
Click on a frequently asked question below to read the answer.
- What is the student loan debt crisis?
- How does the cost of higher education compare to the cost of living in the United States since 1970?
- How did the 2008 Great Recession contribute to the student loan debt crisis?
- How is the student loan debt crisis affecting the economy?
- Would canceling all student debt disproportionately benefit the wealthy / elite?
- Is federal student loan relief a solution to the student loan debt crisis?
- What are some solutions to the student loan debt crisis?
- How would canceling all student loan debt affect the economy?
- At a high-level, how will President Biden’s $10k student loan debt cancellation be financed?
- What is College for All (C4A) and how is it a solution to the student loan debt crisis?
- What is the difference between Free College, College for All, and Tuition-Free College?
- Do the States support Tuition-Free College?
- How do other countries do College for All?
- What are some common myths about College for All?
- How do the 2020 Presidential candidates compare on their positions for College for All and the student loan debt crisis?
- How do the 2020 Presidential candidates compare on their position addressing for-profit colleges?
1. What is the student loan debt crisis?
In a nutshell, the student loan debt crisis began skyrocketing in 2008 and is keeping a generation of people from buying homes, starting businesses, retiring, and investing in the U.S. economy. The cost of higher education and student loan debt began increasing in the 1970s. In 2008 it spun out of control, coinciding with the Great Recession. 1 Between 1999 and 2011, student loan debt increased 511%, significantly outpacing household debt, which peaked between 150-200%. 2 While public and private university tuitions skyrocketed from 1987 to now, wages and salaries flatlined. 3
2. How does the cost of higher education compare to the cost of living in the United States since 1970?
The costs of higher education are significantly outpacing that of median income. Prior to 2007-2008, however, costs were relatively in line with wages. 1 | 2 | 3
- Between 1970 and 2019, the cost to buy a house has increased 86.5%.
- In 1970, the median existing price for buying a house was $152,030 ($23,000 unadjusted), compared to a 2019 median existing price of $283,600.
- Between 1971 and 2016, the cost for a public 4-year college has risen 140%.
- In 1971, the tuition, fees, room, and board per year for a public 4-year college was $8,734 in Dec. 2017 dollars ($1,410 unadjusted). By 2016 the cost was $20,967 per year in Dec. 2017 dollars ($20,150 unadjusted).
- In 1971, public college cost 20.4% of men’s median income and 73.7% of women’s median income per year. By 2017, public college costs 51.8% of men’s median income and 80.9% of women’s median income per year.
- The median income in 1971 for men was $42,757 in Dec. 2017 dollars ($6,903 unadjusted) and for women it was $14,915 ($2,408 unadjusted). In 2016, the median income for men was $40,445 in Dec. 2017 dollars ($38,869 unadjusted) and $25,901 ($24,892 unadjusted) for women.
3. How did the 2008 Great Recession contribute to the student loan debt crisis?
This crisis coincides with the Great Recession of 2008 when the financial markets collapsed. Student debt surpassed $1.5 trillion at the end of 2008, up from $671 billion at the start of 2008. The Great Recession exacerbated the crisis by causing more demand for loans and for people to pursue higher education. “The recession pushed workers to retrain for new jobs, but community colleges, where many students have traditionally enrolled during economic downturns to gain more skills … couldn’t handle the increased demand due to state funding cuts.” Therefore, the “[f]or-profit colleges stepped in to fill the void.” For-profit colleges used controversial “marketing tactics to lure students …who were hoping for a better life. They advertised high graduation and job placement rates, which in some cases were later found to be fabricated.” For-profit colleges are more expensive than public colleges, leaving graduates struggling to find well-paying jobs, further exacerbating their debt. 1
4. How is the student loan debt crisis affecting the economy?
The student loan debt crisis is negatively affecting the U.S. economy by preventing people from being able to buy a house, pursue a career, start a family, take a vacation, etc. Borrowers are buried in debt. 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9
- “Student debt is an enormous burden; not just for young Americans, but the American economy as a whole. It has surpassed both credit card and automobile debt to become the second highest source of consumer debt – being beaten out only by mortgage loans.”
- “One in three of the borrowers report their student loan bill is higher than their rent or mortgage bill, with 65% saying their monthly student loan bill is more than their food budget for the month.”
- “Tuition and fees at public and private schools rose at roughly three times the rate of inflation between 2007 and 2018.”
- The New York Fed published a report in 2015 which notes that “[a]verage sticker-price tuition rose 46% in constant 2012 dollars between 2001 and 2012.”
- 31% of borrowers are delaying home ownership due to student loan debt, that being a leading reason for millennials as compared to boomers, where only 15% ever delayed home buying due to student loans.
- Borrowers are putting off starting a business: “Nearly 40% of borrowers report they have been unable to achieve their career goals. As for becoming their own bosses, 28% said their student debt prevented them from starting a business.”
- “Overwhelming debt prevented 80% of borrowers from saving for retirement, 56% from buying a home, 42% from buying a car, and 50% from contributing to charity, according to the report. More than 85% said student loan debt was a major source of stress, and one in three said such debt is the biggest stress in their lives.”
- Approximately 1 in 6 Americans are burdened by student loan debt. The total amount owed to the U.S. government is nearly $1.5 trillion.
- As of 2018, “45% of students that graduated [college] … have student debt.”
- “Nearly nine of 10 student loan borrowers are struggling to make payments. One in five borrowers report they cannot make the next loan payment, and 44% say it would be a struggle.”
- “Your student loans can affect your debt to income ratio. This is the ratio that determines how much your income is taken up by debt payments. Lenders will look at this to determine if you qualify for a car loan or for a mortgage.”
- “58% of borrowers have taken a hit to their credit, with 10% failing a credit check for a job interview and 13% failing a credit check for an apartment.”
5. Would canceling all student debt disproportionately benefit the wealthy / elite?
While it is true that wealthy borrowers hold a greater share of the total student debt, the benefits of cancelation would have a greater impact on low-income borrowers because they have a higher debt-to-income ratio.
In other words, of course wealthy people technically have higher debt because they can afford to go to more expensive schools. However, low-income people may struggle to even afford community college. As a result, student-loan debt relief will help working class people the most because debt eats up more of their income than the wealthy. 1
6. Is federal student loan relief a solution to the student debt crisis?
Federal student loan relief comes in many forms (forbearance, cancellation, forgiveness, and discharge), but is not serving as a solution to this crisis. 1 | 2 | 3 | 4
- “The terms forgiveness, cancellation, and discharge mean the same thing, but they’re used in different ways. If you’re no longer required to make payments on your loans due to your job, this is generally called forgiveness or cancellation. If you’re no longer required to make payments on your loans due to other circumstances, such as a total and permanent disability or the closure of the school where you received your loans, this is generally called discharge.”
- Borrowers have the options of forbearance, but rarely cancellation and forgiveness. While forbearance merely postpones the repayment, and cancellation is only offered in limited circumstances, of the 49,669 applications, only 206 have been forgiven.
- As of September 30, 2018, there were 890,516 eligible applicants for forgiveness of their loans. 41,221 applied and 423 were approved. This means that 1 percent of applicants were approved.
- Forgiveness is offered if you make on-time monthly payments for 25 years and can be done in 10 years if one works in public service.
- Qualification for forgiveness requires work for a U.S. government agency or for certain nonprofit organizations, working full time for that agency or organization, having direct or consolidated federal loans, and monthly payments on time for 10 years while on an income-driven repayment plan.
- Non-qualifying employment:
- “Labor unions”
- “Partisan political organizations”
- “For-profit organizations (this includes for-profit government contractors)”
- “Government Contractors”
- Non-qualifying employment:
- Discharge is also an option if you took out the loans to attend a school that misled you, or engaged in other misconduct in violation of certain state laws.
- Bankruptcy used to be an option for people to discharge their student debt; however, Joe Biden was instrumental in eliminating that as a concession to Republicans.
7. What are some solutions to the student loan debt crisis?
There are two solutions that are proven to help students, families, and the U.S. economy: College For All and eliminating student debt. While federal student loan relief is available, it is not sufficient to address this crisis. College for All and eliminating student debt go hand-in-hand. To make college tuition-free protects new students from the burden of student loan debt, but this will not help former students who are suffocated with debt. At the same time, to forgive all student loan debt but allow new students to acquire debt will only repeat the problem. As a result, both solutions are required if the student loan crisis is to truly be addressed.
8. How would canceling all student loan debt affect the economy?
Canceling $1.4 trillion in student loan debt would have major benefits for the economy. 1
- Boost GDP: Canceling $1.4 trillion in student loan debt for the 44 million Americans who carry it could boost GDP between $860 billion and $1.08 trillion over 10 years following the debt cancellation. 2
- Lower unemployment rate: The positive effect debt cancellation has on GDP would also have an impact on unemployment and job creation and could add between 1.2 million and 1.5 million jobs per year. 3
- Caps student loan interest rates at 1.88 percent, preventing the Federal government profiting from student loan programs.
- Eliminates or reduces tuition and fees for low-income students at private colleges and universities that serve historically underrepresented minorities”
- Under this proposal, the loan holders on average would save about $3,000 a year.
- Overall the economy would get a boost of approximately $1 trillion over 10 years.
- “Over the course of a lifetime, the average bachelor’s degree holder will funnel $278,000 more into local economies, and contribute $44,000 more in local and state taxes.
- “Earning a four-year degree boasts a personal benefit of nearly 84 percent more than those with only a high school diploma.”
9. At a high-level, how will President Biden’s $10k student loan debt cancellation be financed?
The White House has not provided enough detail on how the repayment program will be implemented. Canceling federal student loans would immediately be added to the federal deficit. 1 The Government Accountability Office (GAO) says there are two options to reduce the deficit: decrease spending or raise taxes. It was also suggested to increase taxes on corporations, high earners, and the wealthy because they have benefited the most from having a more educated workforce that produced their wealth. The most likely scenario would be a combination of tax increases, spending cuts and borrowing which would result in the U.S. taxpayer paying an average of $2503.22. Additionally, those with the highest incomes would have the largest burdens. 2
10. What is College for All (C4A) and how is it a solution to the student loan debt crisis?
College for all (C4A) is a solution that can be viewed as a form of a “jobs program.” Investing in an educated workforce leads to an all-around uplift of the greater and local economies. Bernie Sanders, 2020 Democratic Candidate and Vermont Senator, is the champion of College for All (C4A), drafting the legislation (S. 1947) for the College For All Act that would also eliminate all student debt. 1 | 2
- “Under the College for All Act, the federal government would cover 67% of the cost of eliminating tuition and fees at public colleges and universities and tribal institutions of higher education. States and tribes would be responsible for eliminating the remaining 33% of the costs.”
- The C4A Act “would provide at least $48 billion per year to states and tribes to eliminate undergraduate tuition and fees at public colleges, universities, and institutions of higher education.
- Under this bill, students from any family would be able to attend a public four-year college or university, or four-year tribal college or university, tuition- and fee-free.
- All students, regardless of income, would also be able to attend community colleges, trade schools. or apprenticeship programs tuition- and fee-free.”
- This bill cancels all $1.6 trillion of student loan debt for 45 million Americans within six months.
10. What is the difference between Free College, College for All, and Tuition-Free College?
They’re all the same. “Free college” is a misnomer and should be changed to “tuition-free college” or “college-for-all” because the reality is that people across the political spectrum support the program when they understand how it actually works. Establishment political strategists, legislators, and media design the conversation away from the facts by using “free” college as a framing tactic in order to manipulate the public. The reality is that having our taxes go towards a program that benefits our communities due to a more educated and trained workforce is something that people can get behind regardless of political party. Everyone wants their tax dollars to matter. For example, we just gave trillions in tax cuts to large corporations and the top 10% of wage earners, while one proposal for tuition-free college would cost $47 billion. 1 | 2
11. Do the States support Tuition-Free College?
17 U.S. states offer a version of tuition-free college, sometimes referred to as Tuition Break programs, showing political will does exist for such policies. Traditional red states like Arkansas, Indiana, Kentucky, Montana, Oklahoma, and Tennessee are among the states offering Tuition Break programs. 1 | 2
12. How do other countries do College for All?
Eleven countries offer tuition-free college (Austria, Denmark, Germany, Finland, France, Sweden, Norway, Slovenia, Brazil, Luxembourg, Iceland). They have all established college-entry requirements and minimal fees that vary according to their needs.
13. What are some common myths about College for All?
- MYTH: Everyone will go to college and it will water down the college degree.
- FACT: No one is forced to go to college under a tuition-free college system. It is still up to each individual to take advantage of the opportunity and earn their way into college. It simply guarantees those who are accepted will be able to afford it. It’s really no different than extending public school from 7th grade to high school, as the U.S. did in the first half of the 20th century, except college would not be compulsory (mandatory). 1
- MYTH: The United States can’t afford to pay for it.
- FACT: The plan is funded by imposing a small Wall Street speculation tax on stock trades, bonds, and derivatives that would raise at least $2.4 trillion over the next decade. 2
- MYTH: Dependent students from higher-income families typically attend more expensive institutions; thus, they would get most of the aid if college tuition were free.
- FACT: Seventy-three percent of the benefits of canceling all student debt will go to the bottom 80 percent of Americans who are making less than $127,000 a year. 3
- MYTH: Making college tuition-free would still leave students on the hook for rent, transportation and books, which often comprise the biggest costs for students.
- FACT: “Pell Grants would be available to low-income students to cover the non-tuition and fee costs of school, including: housing, books, supplies, transportation, and other costs of living.”
- FACT: “Participating states and tribes to cover the full cost of obtaining a degree for low-income students (normally those with a family income of less than $25,000) by covering any gap that may still exist after we eliminate tuition, fees, and grants.” 4
- FACT: States that choose not to opt into the federal C4A program would leave students on the hook for additional costs, such as books and rent. 4 | 5
14. How do the 202 Presidential candidates compare on their positions for College for All and the student loan debt crisis?
Sen. Bernie Sanders is the only candidate who really understands the crisis and, therefore, supports all solutions. There are other candidates who would leave students better off than they are now and have strong, notable plans. However, there are two candidates who would likely leave our families and the U.S. economy worse off: Buttigieg and Harris.
- Sen. Bernie Sanders introduced the College For All Act (S. 1947). Funding for this program would come from a tax on wall street. He will also cancel all existing student loan debt. Interest rates would also be capped at 1.88%. Wall Street will pay for this plan. 1
- Joe Biden proposes 2 years of tuition-free community college and expanding Pell Grants, taxing the wealthy to do this. He would halve payments on undergraduate federal loans, simplify income based repayment (IBR) plan and make loan forgiveness work for public servants. The super wealthy would pay under his plan.
- Sen. Cory Booker plans on tuition-free community college and technical school, as well as debt-free four year college. He has his own plan to give every child a treasury bond of $1,000 with yearly deposits based on family income for either college or starting a business. He proposes basic loan forgiveness reform or refinancing to lower rates.
- Mayor Pete Buttigieg wants to boost Pell Grants to offset living expenses, as well as offering $25 billion for Historically Black Colleges and Universities (HBCU) and Minority-Serving Institutions (MSI). He also offers debt-free public college for lower and middle income families. His plan only applies to canceling debt for those who attended low-quality for-profit colleges.
- Rep. Tulsi Gabbard supports Sanders’s College For All Act (S. 1947). She proposes basic loan forgiveness reform or refinancing to lower rates. 1
- Sen. Kamala Harris’ plan claims to make community and four year colleges tuition-free by expanding Income Based Repayment (IBR) in order to ensure that students don’t pay more than they can afford. However, IBR is a plan to repay debt – it has nothing to do with making college tuition-free. She’ll establish a student loan debt forgiveness program for Pell grant recipients who start a business that operates for three years in disadvantaged communities. Participants can have up to $20,000 of debt forgiven and can defer all of their student loans, interest-free, during a business-formation period that can last for as many as three years. This will be paid for by a $12 billion capital grant.
- Sen. Amy Klobuchar famously said at a debate, “I wish I could staple a free college diploma under every one of your chairs. I do. Don’t look. It’s not there.” She proposes basic loan forgiveness reform or refinancing to lower rates.
- Tom Steyer is not clear about his stance on C4A nor addressing existing student loan debt.
- Sen. Elizabeth Warren’s plan covers 2-4 year colleges, also taxing the rich to do this. She would cancel up to $50,000 in student loan debt for 42 million Americans and pay for this by taxing the rich. Anything canceled would not be taxed. Those making under $100,000 per annum would get the full 50 and those making between $100,000 and $250,000 would still get debt canceled, but not the full 50. The wealthy would not receive the same assistance.
- Andrew Yang does not believe the four-year route is best for everybody. Instead, he plans to invest in vocational/technical schools. He would allow students to opt into a plan to repay it through pledging 10% of their salary per year for ten years, after which the balance would be forgiven, allow student loans to be discharged through bankruptcy, and asking schools to forgive loans for students that didn’t graduate.
15. How do the 202 Presidential candidates compare on their position addressing for-profit colleges?
Most of the candidate pool recognizes the problem of for-profit colleges and has strong plans to deal with it. The Obama administration was the first to have to deal with the student loan debt crisis and the rise of predatory for-profit colleges. As such, his administration put in place a number of policies to address these; however, the Trump administration, through Betsy DeVos, tried to erode these to the benefit of for-profit colleges.
- Joe Biden aims to reimpose the Obama era rules. He would “[s]top for-profit education programs from profiteering off of students.” He calls vaguely for for-profits to prove their value to the Department of Education, reinstate the Borrower’s Defense Rule, and forgive debt held by persons deceived by for-profits colleges.
- Sen. Cory Booker has no plan to address for-profit colleges.
- Mayor Pete Buttigieg is not clear about whether he would vigorously protect people from for-profit colleges. He simply proposes to apply strict standards to for-profit colleges.
- Rep. Tulsi Gabbard has no plan to address for-profit colleges.
- Sen. Kamala Harris aims to reimpose the Obama era rules. She would crack down on for-profit colleges and lenders that defraud students. She does have receipts in this area demonstrating that she led California in her role as State Attorney General to prosecute for-profit colleges.
- Sen. Amy Klobuchar aims to reimpose the Obama era rules. She would enforce “gainful-employment rules that hold career education programs — including those at for-profit colleges — accountable for student outcomes.”
- Sen. Bernie Sanders would impose a federal ban on building for-profit and charter schools.
- Tom Steyer has no plan to address for-profit colleges.
- Sen. Elizabeth Warren would ban for-profit colleges from receiving any federal dollars (including military benefits and federal student loans).
- Andrew Yang has no plan to address for-profit colleges.
