Bernie Sanders’ Student Debt Cancellation Plan is the Only Way for Maryland To Move Beyond the Effects of the Student Debt Crisis Bobby Moore Follow Nov 26, 2019 · 16 min read

Representative Ilhan Omar (D-Minnesota) and Representative Alexandria Ocasio-Cortez (D-NY) support Bernie Sanders’ Student Debt Cancellation Plan in June 2019

Authors: Maryland for Bernie Sanders Board Member, Bobby Moore, and Steering Committee Member, Jake Burdett.

Editors: Maryland for Bernie Sanders State Coordinator, Keanuu Smith-Brown, and Steering Committee Member, Richard Elliott.

Collective Endorsers: Over 100 current/former higher education students residing in Maryland, who are listed at the bottom of this article.

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Context of Student Debt in Maryland

Student debt is obviously not unique to the state of Maryland. Across the United States, there are approximately $1.6 trillion dollars in student debt (federal and private). Across 50 states, Maryland ranks in the bottom 20 for “lowest average student debt”. The average student debt in Maryland is $29,178, up 2.5% from 2017, with over 54% of state residents struggling with student debt.

According to an analysis conducted in 2017 across the top 100 largest cities in America, Baltimore ranked 83/100 and Silver Spring ranked 96/100 for “lowest average student debt”. This 2017 analysis also highlights that Baltimore and Silver Spring have higher than state average amounts of student debt; the average amount of student debt for a resident in Baltimore is $35,665, while the average amount of student debt for a resident in Silver Spring is $39,617.

According to the US Department of Education, federal student loan balances are most carried by young people (not including private loans). In Maryland, the following statistics show the distribution of federal student loan debt across age cohorts:

Among those federal student loan borrowers 24 or younger in Maryland, 150,400 borrowers collectively make up $2.48 billion in federal student loan debt.

Among those federal student loan borrowers in Maryland from 25 to 34, 275,300 borrowers collectively make up $10.87 billion in federal student loan debt.

Among those federal student loan borrowers in Maryland from 35 to 49, 217,700 borrowers collectively make up $11.57 billion in federal student loan debt.

Among those federal student loan borrowers in Maryland who are age 50+, 143,800 borrowers collectively make up $7.39 billion in federal student loan debt.

It is also important to note LendEdu’s 2019 Annual College Risk-Reward Indicator (CCRI) Report, which essentially shares the “best bang for your buck” by comparing average early pay with average student loan debt associated with specific higher education institutions. Among the analysis of 1,000 universities, the following higher educational institutions in Maryland were in the bottom 500–800 CCRI Index: Frostburg, McDaniel, Bowie, Hood College, Stevenson, Morgan State, and Mt. St. Mary’s, and Goucher. Further, only four Maryland schools ranked in the top third (100–300) CCRI Index: Towson, UMD, St. Mary’s, and UMBC. No Maryland higher education institutions, in this analysis were, in the top 100 CCRI Index.

Sanders Vs. Warren — Total Student Debt Cancellation Vs. Student Debt Relief

So far, only two candidates have been able to come up with a plan to attempt to address the student debt crisis: Bernie Sanders and Elizabeth Warren. While it’s great that candidates are finally talking about this issue, we believe that Bernie’s complete student debt cancellation plan is the only proposal that adequately addresses the student debt crisis nationally, and more specifically, within the context of Maryland.

It is important to understand that there are major differences between Bernie Sanders and Elizabeth Warren’s student debt cancellation/relief plans. These differences must first be clearly presented and understood before understanding why Sanders’ student debt cancellation plan is the only option for Maryland to truly move beyond the student debt crisis in our state.

Key Elements of Warren’s Student Debt Relief Plan

According to Elizabeth Warren’s campaign website, here are the main policy pillars:

It provides up to $50,000 in student loan debt relief for every person with household income under $100,000.

It provides a degree of debt relief for every person with household income between $100,000 and $250,000: The $50,000 relief amount is reduced by $1 for every $3 in income above $100,000, so, for example, a person with household income of $130,000 gets $40,000 in relief rather than $50,000.

It offers no debt cancellation or relief to people with household income above $250,000 (the top 5%).

Private student loan debt is also “eligible for cancellation, and the federal government will work with borrowers and the holders of this debt to provide relief”.

This plan is funded with an “Ultra-Millionaire Tax — a 2% annual tax on the 75,000 families with $50 million or more in wealth”. This funding mechanism would also fund tuition free public colleges and universities in the future.

Canceled debt will not be taxed as income.

Key Elements of Sanders’ Complete Student Debt Plan

According to Bernie Sanders’ campaign website, here are the main policy pillars of his student debt cancellation plan:

Simply cancels all $1.6 trillion in student debt (public and private).

in student debt (public and private). To pay for this, Sanders proposes an imposed tax of a fraction of a percent on Wall Street speculators. This Wall Street speculation tax will raise $2.4 trillion over the next ten years. It works by placing a 0.5 percent tax on stock trades — 50 cents on every $100 of stock — a 0.1 percent fee on bond trades, and a 0.005 percent fee on derivative trades. This funding mechanism would also fund tuition free public colleges and universities in the future.

Cancelled debt will not be taxed as income.

In 2019, Sanders introduced a bill to reflect this Complete Student Debt Cancellation Plan, with wide congressional support, most notably from Alexandria Ocasio Cortez (D-NY), Ilhan Omar (D — MN), Rashida Tlaib (D-MI), Sheila Jackson (D — TX), Pramila Jayapal (D — WA), and Nanette Barragan (D — California).

Five Reasons Why Sanders Complete Student Debt Cancellation Plan, compared to Warren’s student debt relief plan, is the only way for Maryland to move beyond the effects of the student debt crisis

Reason #1 — Warren’s plan will guarantee severe continued debt for over 153,000 Maryland Federal Student Loan Burrowers (Nearly 30% of all Federal Student Loan Borrowers in Maryland), Bernie’s complete student debt plan will cancel all of it.

For federal student loans, the interest rates for loans disbursed between July 2017 to July 2018 were set at 4.45% for undergraduate direct subsidized and unsubsidized student loans and 6% for graduate unsubsidized student loans. According to the U.S. Department of Education Office of Student Aid, their June 2019 federal loan portfolio indicates the following statistics that are specific to Maryland federal loan borrowers. Given these statistics, we’ve listed the broad implications of what federal borrowers would experience under both Warren and Sanders’ student debt plans.

50,200 federal student loan borrowers in Maryland have between $60,000 and $80,000 in debt, making up a total student loan federal balance of $3.48 billion. Under Warren’s plan, these borrowers would have a remaining debt balance of $10,000 — $30,000. Under Warren’s plan, these borrowers would still have a collective federal student loan debt between $502 million and $1.5 billion , while Sanders plan would cancel all of this collective debt.

, while Sanders plan would cancel all of this collective debt. 29,600 federal student loan borrowers in Maryland have between $80,000 and $100,000 in debt, making up a total student loan federal balance of $2.63 billion. Under Warren’s plan, these borrowers would have a remaining debt balance of $30,000 — $50,000. Under Warren’s plan, these borrowers would still have a collective federal student loan debt between $888 million and $1.48 billion , while Sanders plan would cancel all of this collective debt.

, while Sanders plan would cancel all of this collective debt. 51,700 federal student loan borrowers in Maryland have between $100,000 and $200,000 in debt, making up a total student loan federal balance of $7.94 billion. Under Warren’s plan, these borrowers would have a remaining debt balance of $50,000 — $150,000. Under Warren’s plan, these borrowers would still have a collective federal student loan debt between $2.5 billion and $7.7 billion , while Sanders plan would cancel all of this collective debt.

, while Sanders plan would cancel all of this collective debt. 22,300 federal student loan borrowers in Maryland have over $200,000 in debt, making up a total student loan federal balance of $6.35 billion. Under Warren’s plan, these borrowers would have a remaining debt balance of $150,000+. Under Warren’s plan, these borrowers would still have a collective federal student loan debt of over $3.34 billion, while Sanders plan would cancel all of this collective debt.

In total, Warren’s plan would leave 153,800 borrowers (nearly 30% of all federal borrowers in Maryland) with large, yet varying degrees of partial federal student loan balances. Keep in mind, this solely accounts for public federal student loan balances, not private student loan balances (we’ll get to that part of the discussion in the “Reason # 2” section). Under Warren’s plan, their campaign says that students are eligible to possibly refinance their remaining federal student loan balance after partial student debt relief takes place, but it does not clearly guarantee a more affordable interest rate or payment structure once partial debt relief is applied to their loans. In other words, those experiencing partial student debt relief may still face the same non-affordable payment plans and interest rates. This could promote loan delinquency, and as an effect, the potential for additional accrued debt via interest rates. Under Sanders’ plan, those exploited by the current predatory student loan process will not have to navigate the non-guaranteed option of refinancing partially remaining debt, but alternatively, will be completely unchained from all future loan payments.

Reason #2: Bernie’s Student Debt Cancellation Plan will end the exploitation of students by high-interest rate private loan lenders, while Warren’s will inevitably result in a level of continued exploitation of some students who financed their education through private loans. Under Warren’s plan, private lenders will continue to profit off the exploitation of many students borrowers.

It is clear that the majority of student debt held nationally and in Maryland stems from federal loans, but billions of dollars still account for the overall student debt balances both nationally and in our state of Maryland. Given these are private entity lenders, we worked with available data, but we want to emphasize that there are data availability constraints at the state level for analyzing private loan portfolios.

According to a 2017–2018 College Insight Analysis of a set of Maryland Universities and Colleges, 27% of student loans taken out to attend higher education institutions in Maryland, from this specific analysis, are from private lenders. The table below includes the percentages of students who leave with student debt after attending a specific institution, and most notably, the percentage of debt borrowed from private lenders to attend that institution. In using Salisbury University as an example, 57% of students leave with debt, and 23% of the loans taken out to attend Salisbury are borrowed from private lenders (as opposed to federal loans).

For private non-federal loans, interest rates were as high as 14% in September 2018. Interest rates for private lenders vary based on various factors (credit, etc.). Students and graduates who had to utilize private loans to finance all or a portion of their student loans often cannot afford to make substantial debt-reducing payments due to the associated high interest rates with these private loans. Many of these students may have to pay smaller or minimum payments with these private loans, resulting in the possibility of actually paying more debt overall than the initial debt due to the extreme interest rates.

One non-clarified aspect of Warren’s plan is the prioritization/process for debt relief for borrowers who have both public and private loans. In other words, if you have over $50,000 in debt, will Warren’s plan make the student forgive the lower interest rate public loans first, before tackling any of higher interest rate private loans? Our hunch is yes given that it is not clarified, which would leave borrowers with the remaining private loan debt with extremely high interest rates.

In taking into consideration the significantly higher than average interest rates associated with private student loans, the fact that a significant percent of all student debt in Maryland comes from private lenders, and that several prominent higher education institutions in Maryland generally have between 20%-38% of their associated loans from private lenders — Warren’s plan puts Marylander student borrowers, especially those with public and private loans, in a vulnerable position to continue to be in long-term financial hardship for paying off all of their student loans.

Simply put, Sanders student debt cancellation plan ends all levels of exploitation for student borrowers who had to use private loans for some or all of the higher education financing.

Reason #3 — In cancelling all student debt, Sanders understands the racial and labor market factors associated with the student crisis. Warren’s student debt relief approach does not adequately address the student loan crisis from a racial equity and labor market perspective.

Warren’s student debt relief plan does not adequately address racial and labor market disparities associated with the student loan crisis in Maryland. Consequently, people of color and those living in lower employment zones throughout Maryland will continue to experience a significant debt burden (% of income used to pay student loans), and higher delinquency rates, which commonly results in overall more incurred student debt over time.

Due to racial and labor market disparities in Maryland, borrowers in Maryland have significant delinquency rates associated with federal student loans. According to the U.S. Department of Education Office of Student Aid, the following table presents delinquency statistics for Maryland federal student loan burrowers. As of June 2019, over 60,000 federal student loan borrowers are delinquent on paying back their loans, which collectively accounts for over $2.05 billion in delinquent federal student loans.

MappingStudentDebt.Org compares the relationship between the percent of income spent on student loan payments (debt burden), employment rates, race, and delinquency rates. Their mapping and methodology (available at state, city, or zip code level) confirms the following trends:

Debt burden is highest in areas where employment rates are low, a sign of weak labor market conditions.

Debt burdens also are high in some zip codes where average student loan balances are high.

Delinquency disproportionately affects minority communities.

Even after controlling for income, race still has a strong impact on student loan delinquency.

Middle-class minorities are hurt the most by student loan delinquency.

As an example within the context of Maryland, the following maps show trends for the city of Baltimore across delinquency rates, student loans held by African Americans, debt burden (% of income used to pay student loans), and the employment rate. In using this example of Baltimore, Maryland, the trends between delinquency, race, unemployment, and debt burden are all interrelated factors which demonstrate the racial and labor market disparities associated with the student debt crisis. MappingStudentDebt.Org could also be used to replicate these disparity dynamics across various regions and cities in Maryland.

Simply put, Sanders’ Complete Student Debt Cancellation Plan intentionally addresses the racial and labor market disparities associated with the student debt crisis in Maryland, while Warren’s student debt relief plan does not adequately do so.

Baltimore — Student Loan Delinquency Rates. Darker color indicates higher delinquency rates

Baltimore — Student Loan Debt Held By African Americans. Darker color indicates debt burden rates of African Americans in Baltimore.

Baltimore — Debt Burden (% income spent towards student debt). Darker color indicates higher debt burden.

Baltimore — Employment rate — Lighter color indicates lower employment rates.

Reason #4 — In following Sanders’ proposal of cancelling all student debt, this is the only way we can promote a potential pathway for all borrowers, especially young people, to have the opportunity to pursue home ownership and use more of their income in a discretionary manner in the Maryland economy.

Nearly 60% of all federal student debt (approximately $13 billion) is held by Marylanders less than 35 years old. As outlined in Reason #1and Reason 2, Warren’s student debt relief plan will inevitably leave billions of dollars of partial debt on the table (private and public), likely resulting in never-ending continued debt for some student borrowers. If young borrowers are unable to refinance that debt or are forced to continue never-ending, income-draining payment plans, that will result in overall less money they can invest in home ownership or discretionary spending in the Maryland economy. Various research sources have shown that a primary factor for reduced home ownership, particularly for young people, is due to the enormous burden of student debt. In ensuring that all debt is cancelled — public, private, undergraduate, graduate — Bernie’s plan would guarantee a release of this debt for all Maryland borrowers, increasing their potential to pursue home ownership. Simply put, Bernie’s student debt cancellation plan is the only option that truly promotes a potential pathway to home ownership for all Maryland borrowers, especially young people. Similarly, the only way we can guarantee the potential redirection of over $32 billion in student debt to discretionary spending in our state economy is to cancel all of it.

Reason #5 — We believe that Bernie Sanders’ Student Debt Cancellation Plan will be easier to build broad consensus around, as well as be easier to manage as a government program.

Whenever a redistributive policy is means-tested, as Warren’s is, it becomes much harder to pass, as it can be easily weaponized by the GOP as a welfare policy given only to the undeserving. Alternatively, since universal programs like Bernie’s Complete Student Debt Cancellation Plan will help everyone, we anticipate it will be easier to build broader consensus around it from a legislative and public buy-in perspective.

Further, Warren’s student debt relief cancellation plan has several borrower contingencies for student debt relief eligibility (see overview of Warren’s plan at the beginning of this article). Under Warren’s plan, these contingencies will require extensive administrative planning, time, and resources — considerably more than Sanders debt cancellation plan.

The Bottom Line: Sanders’ Complete Student Debt Cancellation Plan is the only way for Maryland to move beyond the racial, labor market, and economical effects of the student debt crisis.

At the end of the day, we need a bold progressive leader who is willing to stand up and say that students should not be punished for the crime of simply getting a higher education. Not only is Sanders’ Complete Student Debt Cancellation Plan the only option for our state to move beyond the student debt crisis, it is morally the right thing to do as a nation, and in our state of Maryland.

The question is, are we willing to mobilize, stand up, fight back…and get what we deserve as citizens and as a state? Please consider joining our movement, and vote for Bernie Sanders for president in 2020!

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About the Authors

Bobby Moore is a progressive activist who resides in Patterson Park in Baltimore City. He is also a Maryland for Bernie Sanders State Board Member. He can be reached on twitter at BaltimoreBobby3 or at bobbymoore570@gmail.com

Jake Burdett is a 21 year old political science major at Salisbury University, as well as a progressive activist that serves as a Maryland for Bernie Sanders Steering Committee Member and secretary for the organization. He can be found on Twitter @jake_burdett.

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The following current/former higher education students reside in Maryland and believe that Bernie Sanders’ complete student debt cancellation plan is the only way for our state of Maryland to move beyond the racial, economic, and labor market effects of the student debt crisis.

Maryland for Bernie Sanders

Anne Arundel County — Keanuu Smith-Brown, State Coordinator (University of Baltimore)

Baltimore City — Richard Elliot, Steering Committee Member (Johns Hopkins University)

Eastern Shore — Jake Burdett, Steering Committee Member (Salisbury University)

Baltimore City — Richard Bruno, Board Member (Princeton University)

Baltimore City — Bobby Moore, Board Member (Johns Hopkins University)

Baltimore County — Devonie Doles, Board Member (Community College of Baltimore County Essex)

Baltimore County — Kristy Fogle, Board Member (University of Maryland, Baltimore County)

Eastern Shore — Jared Schablein, Board Member (University of Maryland, College Park)

Howard County — Sanjeev Sriram, Board Member (University of California, Riverside)

Prince George’s County — Michael Dunphy (University of Maryland, College Park)

Prince George’s County — Amaka Emerson (University of Maryland, Baltimore County)

Western Maryland — Tyler Bauer (Frostburg State University)

Western Maryland — Susannah Lapping (Jacksonville University)

Anne Arundel County

Morgan Drayton, University of Baltimore School of Law

Colin Wick, University of Maryland, College Park

Matthew O’Connor, Towson University

Alexander Holt, Johns Hopkins University

Charles County

McKayla Wilkes, Northern VA Community College

Baltimore City/County

Alexander Banks, Florida State University

Samuel Becker, University of Maryland, Baltimore County

Jasmine Brown, Westminster College

Chris Broughton, Towson University

Megan Bunn, Johns Hopkins University

Jill Carter, Loyola University Maryland

Mackenzie De La Cruz, University of Maryland, Baltimore County

Ryan Ebrahimy, Johns Hopkins University

Barrie Friedland, Johns Hopkins University

Jake Garcia, Towson University

Andrew Geddes, Ohio State University

Malcolm Heflin, University of Maryland, Baltimore County

Dave Heilker, Community College of Baltimore County Essex

Katherine Lawler, University of Notre Dame

Omar Lloyd, Johns Hopkins University

Michael Marinelli, University of Maryland, College Park

Eileen Meyer, Rice University

Jade Moore, Johns Hopkins University

Nicholas Rust, University of Maryland, Baltimore County

Brynn Smith, Brown University

Nate Stewart, University of Maryland, Baltimore County

Dante Swinton, University of Baltimore

Anjana Turner, Tulane University

Matthew Vocci, Temple University

Phillip Westry, University of Maryland, College Park

Perry Wheeler, University of Maryland, College Park

Joyell Arvella, New England Law

Heather Kangas, University of Maryland, Baltimore County

Nadine Andersson, University of Maryland, Baltimore County

Alec Weinberg, Brown University

Sandra Abernathy, ITT Technical Institute

John Clampitt, Towson University

Michael Newhouse, Virginia Tech

Andrew Johnson, Stevenson University

Andrew Ferguson, University of Maryland, College Park

Michael Bjerngarrd, Johns Hopkins University

Malik-Bakari Harris, University of Maryland, Baltimore County

Amy Murphy-McGee, Community College of Baltimore County

Mathew Gorschboth, Towson University

Jakerya Randolph, Frostburg State University

Imani Stewart, Community College of Baltimore County

Brian Sevilla, University of Maryland, College Park

Jordan Fritz, University of Maryland, Baltimore County

Jonathan Raun, Yale University

Kristina Fuller, Goucher College

Alysia Johnson, Loyola University

Joash Brown, University of Maryland, Baltimore County

Jennifer Robinson, Morgan State University

Shanna Coe, Baltimore City Community College

Eastern Shore

Rose Bean, Adams State University College

Tyler Biery, Salisbury University

Aida Dodoo, Salisbury University

Michael Goldsmith, Salisbury University

Cagney Gunson, Salisbury University

Fathima Rifkey, Salisbury University

Ethan Sensbach, Salisbury University

Keirien Taylor, University of Southern California

Sarah Dunphy, University of Maryland, College Park

Adika Aniedobe, University of Maryland College Park

Catherine Gretschel, Maryland Institute College of Art

Garrett Hill, University of Maryland, College Park

Kayleen Roger, Salisbury University

Andrew Ferguson, University of Maryland, College Park

Kayleen Reger, Salisbury University

Harford County

Ashley Bobal, University of Baltimore

Howard County

Juliann Garcia, Northern Michigan University

Raquel Coelho, Howard Community College

Sarah Vinci, Salisbury University

Eric Miller, American University

Erin Callahan, University of Maryland, College Park

David Waters, University of Maryland, College Park

Garrett Waters, Boston College

Montgomery County

Naeem Alam, University of Maryland, College Park

Cesar Garzon, University of Maryland, College Park

Evan Murphy, Salisbury University

James Hedrick, University of Texas

Lisa Bechmann, Ramapo College

Ryan Clark, University of Maryland, College Park

Prince George’s County

Shelia Bryant, Harvard University

Dylan Burns, University of Maryland, College Park

Ryan Clark, University of Maryland, College Park

Vivian Ebisike, Prince George’s Community College

Emily Kaplan, University of Maryland, College Park

Nadia Owusu, University of Maryland, College Park

Dashiell Yeatts-Lonske, University of Maryland, College Park

Matt Polizzotti, University of Maryland, College Park

Jordan Lanham, University of Maryland, College Park

Suraj Bandela, University of Maryland, College Park

Jared Gill, University of Maryland, College Park

Kate Yoo, Augsburg University

Jacob Smith, University of Maryland, College Park

Jack Ramey, University of Maryland, College Park

Kristaly Guerrero, Frostburg State University

George Boateng, University of Maryland, Baltimore County

Kirsten Stade, Stanford University

Western Maryland