× Expand J. Scott Applewhite/AP Photo Sanders said that the plan “will boost our economy and offer real opportunity for our people.”

Bernie Sanders's proposal to cancel all outstanding student debt in the United States, roughly $1.6 trillion, received an enthusiastic reception online, but a few education policy experts and even left economists were more lukewarm. They say that Sanders’s failure to eliminate tuition at private colleges and graduate programs, along with expenses outside of tuition like books and room and board, will mean that this debt jubilee will be followed merely by another debt expansion. And they add that people who worked hard to pay off student loans get shortchanged by the proposal, which helps the subset of debtors still saddled with debt, rather than everyone who toiled under the debt-financed system. Finally, there are criticisms that the plan is a bailout for wealthy college graduates, who don’t need the help as much as more needy families.

But academics who support student debt relief have clapped back. The Prospect has obtained a letter from more than 100 academics who support Senator Sanders’s plan. It includes economists close to Sanders, like Columbia’s Jeffrey Sachs and former Sanders staffer Stephanie Kelton, now at Stony Brook University. It also includes Sara Goldrick-Rab of Temple University, who when the Sanders plan was first released expressed mixed feelings about the proposal, but now but now is a confirmed supporter.

Other notables on the letter include Jedediah Purdy of Columbia Law School, influential African American scholars Darrick Hamilton of Ohio State and Sandy Darity of Duke University, and several adherents, like Kelton, to the emerging discipline of Modern Monetary Theory, which contends that governments can run larger deficits to grow the economy to its capacity, as long as it eventually adjusts to keep inflation in check.

In their open letter, the academics stress the soaring cost of higher education, which has far outstripped the cost of living, rising by 3,819 percent from 1964 to 2019. This has priced many prospective students out of college altogether, while burdening 45 million others with large amounts of debt at the outset of their careers. “In the face of this crisis, nothing short of a complete overhaul of our public higher education system will suffice,” the academics write.

Part of their rationale is that debt cancellation would be, in effect, a jobs program. A study last year from the Levy Economics Institute, which letter signers Kelton and Scott Fullwiler of the University of Missouri-Kansas City contributed to, found that debt cancellation would create up to one million new jobs per year and increase gross domestic product by around half a percentage point. Eliminating the debt overhang would encourage additional consumer spending, skills attainment, and entrepreneurship, while improving access to credit and keeping the public more stable through economic downturns. A separate research paper argued that cancelling student debt would cut the racial wealth gap by more than half.

In other words, this strain of academic thought puts student debt near the center of our economic problems, crediting the inability for people graduating into the economy to get above water with many of the economy's shortcomings. There's some research to back this up as well. The Federal Reserve Board of New York has identified student debt as a primary obstacle to homeownership. Borrowers with heavy debt loads cannot take on large purchases, and with consumer spending a primary part of our economy, this creates broad stagnation. We know that debt overhang slowed the recovery from the financial crisis and Great Recession; the theory here is that student debt has prolonged that sclerotic state.

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If this situation were reversed, and the debt overhang wiped away, the authors write that the results “would benefit the entire economy.” Retailers would enjoy higher consumer demand from the additional discretionary income, calculating that forgiven debt would annually free up $3,000 per debtor to spend on other goods and services. “That means greater liberty to start a business, buy a home, or deal with other unmet needs,” the letter concludes. “It means freedom for those who are collectively trapped under the weight of $1.6 trillion in debt, and it means a more prosperous economy for us all.”

The letter also calls for making public colleges and universities tuition-free, which is part of the Sanders plan as well. Versions of the Sanders plan appear in House bills from Representatives Ilhan Omar (D-MN) and Pramila Jayapal (D-WA).

In a statement to the Prospect, Senator Sanders says: “These scholars are saying what millions of young people already know from their own experience: the Wall Street crash of 2008 devastated the economic prospects of an entire generation. If we do not act boldly and decisively, these young people will face lower living standards than their parents enjoyed.” Sanders’s College for All Act is fully funded through a financial-transactions tax on securities trades. Sanders said that the plan “will boost our economy and offer real opportunity for our people. And the cost will be borne entirely by speculators on Wall Street.”

Sanders's student debt plan is likely to come up Thursday night when he takes the stage in Miami in the first round of presidential debates.

Skeptics of student debt cancellation, which 2020 candidate Elizabeth Warren has also endorsed (though with some slight means-testing, in contrast to Sanders's universal plan), have focused their criticisms on the distributional analysis of the proposal, wondering whether helping relatively well-off college graduates is the best use of welfare dollars. The use of debt relief as an economic tool has been less discussed.

There's certainly reason to wonder whether student debt relief, as opposed to relieving medical or mortgage or credit card debt, makes the most sense. But student debt is the second-largest amount of debt in the economy, and combining the elimination of that debt with tuition-free college and much stronger financial support for higher education at the state level would reduce barriers to obtaining skills and could prove potent economically and politically.

The letter is below: