The bill would make community colleges and trade schools tuition-free for everyone, while four-year colleges and universities would be tuition-free for students from families making less than $125,000 annually. The proposal would also double the Pell Grant award, which can be used for living and non-tuition expenses, to $12,990 from $6,495 for the 2021-2022 school year.
"In the wealthiest country in the history of the world, a higher education should be a right for all, not a privilege for the few," Sanders said in a statement. "If we are going to have the kind of standard of living that the American people deserve, we need to have the best educated workforce in the world."
Sanders, I-Vt., and Jayapal, D-Wash., said the federal government would shoulder about 75% of the cost of free college at public schools, while states would pay the remaining share. In the event of an economic downturn, the federal government's portion would increase to 90%.
The progressive lawmakers called for a new tax on Wall Street in order to fund the measure, the cost of which is unclear. The Tax on Wall Street Speculation would impose a 0.5% tax on stock trades, a 0.1% fee on bonds and a 0.0005% levy on derivatives. It would raise up to $2.4 trillion over the next decade, according to a copy of the bill.
The proposal comes amid growing pressure on President Biden to eliminate $50,000 in student loan debt per borrower. At the beginning of February, Sens. Chuck Schumer, D-N.Y., and Elizabeth Warren, D-Mass., introduced a resolution calling on Biden to erase $50,000 per borrower via executive order.
The lawmakers maintained that Biden could use existing executive authority under the Higher Education Act to order the Department of Education to "modify, compromise, waive or release" student loans.
But Biden has rejected those plans and has instead called for forgiving $10,000 in student loan debt. He also extended a freeze on student loan payments through Sept. 30, 2021, immediately upon entering office, benefiting about 41 million Americans.
Canceling student loan debt may disproportionately benefit wealthy Americans: A recent working paper published by the University of Chicago’s Becker Friedman Institute for Economics shows that erasing all student loan debt would distribute $192 billion to the top 20% of earners in the U.S., but just $29 billion to the bottom 20% of U.S. households.
Under a universal loan forgiveness program, the average individual among the top-earning borrowers would receive $5,944 in forgiveness, while those with the lowest incomes would receive $1,070 in forgiveness, according to the study, authored by economists Sylvain Catherine and Constantine Yannelis.
Outstanding student loan debt has doubled over the past decade, nearing a staggering $1.7 trillion. About one in six American adults owes money on federal student loan debt, which is the largest amount of non-mortgage debt in the U.S.
It has been cited as a major hindrance in people’s "economic life" by Federal Reserve Chairman Jerome Powell.