This means that the day after Senator Sanders “hit the reset button” as he stated in the press conference, the national student debt odometer would start spinning again.
Will these subsequent debts also be canceled? Otherwise, the plan would create a generation of student loan lottery winners, with losers on either side. People who had already paid off their loans would get nothing. People with future loans would get nothing. Those in debt on the day the law was passed would be rewarded.
If, on the other hand, the law creates an implied promise that all kinds of future student debt will also be canceled, it could have unintended consequences.
The Sanders and Warren plans control the cost of public undergraduate education by setting tuition fees at zero and maintaining them. Thus, the financing of public higher education would become a matter for the federal government and the states which would decide how much they want to spend on higher education. Universities would have no pricing power because there would be no pricing.
Graduate programs, on the other hand, would still be mostly free to charge whatever they want, as is the case today. With the precedent for loan cancellation set, graduate programs may be tempted to charge even more, as students may never have to repay their loans.
While the Warren Plan does not stop the exorbitant cost of higher education, it does contain provisions that could limit unintended consequences to some extent. The plan would limit past loan forgiveness to $ 50,000, and only for families earning less than $ 100,000 per year. (Families earning up to $ 250,000 will receive a partial pardon.) The Warren Campaign estimates that only 47 percent of masters borrowers and 27 percent of doctoral graduates. and vocational school borrowers would have all their loans canceled.
The Sanders plan has no limits. It simply cancels all student debt. Keane Bhatt, spokesperson for Mr Sanders, notes that the plan would drastically reduce interest rates on future graduate student loans, which currently stand at 8.5%, and encourage states to limit the increase in student fees. schooling in public university systems. But he acknowledged that the plan would not make higher and professional education free, nor would it regulate private universities.