Bernie Sanders announces plan to cancel US student debt

Washington: Days before the first Democratic presidential debates, Senator Bernie Sanders and House progressives came out with legislation to cancel all student debt, going farther than a signature proposal by Senator Elizabeth Warren as the two jockey for support from the party's liberal base.

By cancelling all student loans, Sanders says the proposal would address an economic burden for 45 million Americans. The key difference is that Warren's plan considers the income of the borrowers, cancelling $US50,000 ($71,700) in debt for those earning less than $US100,000 per year and affecting an estimated 42 million people in the US.

Democratic presidential candidate Senator Bernie Sanders has vowed to eliminate all student debt.Credit:AP

That appeal is likely to be fleshed out this week during the first Democratic debates. Twenty candidates are set for the showdown, with Warren part of the lineup on Wednesday and Sanders appearing a day later. The events come as Warren appears to be cutting into Sanders' support from the left.

Sanders' effort at one-upmanship on student loans, named the College For All Act, would cancel $US1.6 trillion of debt and save the average borrower about $US3,000 a year. The result would be a stimulus that allows millennials in particular to invest in homes and cars that they wouldn't otherwise be able to afford. It would cost $US2.2 billion and be paid for – and then some – by a series of taxes on such things as stock trades, bonds and derivatives, according to the proposal.

The universal debt relief is designed partly around the idea that it would mostly benefit Americans who can't afford college tuition without loans, according to a senior Democratic aide who spoke on condition of anonymity because the legislation wasn't yet public.

Warren's plan, which she has suggested in published reports will be introduced as legislation, would be paid for by imposing a 2 per cent fee on fortunes greater than $US50 million. Warren projects the levy would raise $US2.75 trillion over 10 years, enough to pay for a universal child-care plan, free tuition at public colleges and universities, and student loan debt forgiveness for an estimated 42 million Americans – with revenue left over. Critics say top earners would find ways around such penalties.

AP

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