Bernie Sanders Says Student Debt Cancellation Plan Will Reduce Racial Wealth Gap

Sen. Elizabeth Warren, who's also running for president, argued that canceling all student debt would widen the racial wealth gap.

Sen. Bernie Sanders (I-Vt.) said Saturday that his plan to cancel all student debt would reduce the racial wealth gap, contrary to the claims of another of the candidates for the Democratic presidential nomination, Sen. Elizabeth Warren of Massachusetts.

Sanders and Warren were among 19 contenders for the party nod to speak at a candidate forum hosted by the public-sector labor union AFSCME in Las Vegas.

Warren, a populist often grouped alongside Sanders ideologically, said during her appearance earlier in the day that she wants to abolish 95% of student debt ― rather than all of it ― because a total cancellation would exacerbate the wealth gap between black and white Americans.

HuffPost’s Amanda Terkel, who moderated the discussion alongside Jon Ralston of The Nevada Independent, asked Sanders to respond to Warren’s claim.

“As I understand it ― I don’t have all the facts in my head now ― our plan will reduce the racial wealth gap from 12 to 1 for younger people, to 5 to 1,” Sanders said. “That’s pretty significant.”

Sen. Bernie Sanders (I-Vt.) argued at a candidate forum that his single-payer, "Medicare for All" health care plan would benefit unions at the bargaining table.
Sen. Bernie Sanders (I-Vt.) argued at a candidate forum that his single-payer, "Medicare for All" health care plan would benefit unions at the bargaining table.
HuffPost/Damon Dahlen

Sanders later added a statistic he said he learned recently about how student debt affects black college graduates.

“For African American young people, 12 years after they took out the debt, they are more in debt than when they took it out in the first place, because of interest rates,” he said. “And that is really crushing an entire generation.”

Another major benefit of canceling all student debt is that it would eliminate the bureaucratic paperwork associated with needs-based programs, according to Sanders.

“The American people are sick and tired of filling out forms,” he said.

Some evidence backs up Sanders’ claim that his plan would reduce the racial wealth gap. A study of the impact of both Sanders’ and Warren’s respective student debt cancellation plans, economist Marshall Steinbaum found that Sanders’ plan would narrow the black-white disparity more than Warren’s.

But other data contradicts Sanders’ claim. His estimate of how the plan would narrow the racial wealth gap among young people appears to be drawn from an earlier study by Steinbaum that only looked at the effect of student loan cancellation on people ages 25 to 40.

Mark Huelsman, a senior policy analyst at the liberal think tank Demos, calculated that only Warren’s plan would reduce the racial wealth gap of the overall population. That’s because the lack of means-testing in Sanders’ plan means that it increases the assets of high-income households, which are disproportionately white.

Sanders was clearly one of the crowd favorites in Las Vegas, drawing warm applause when he was introduced and for many of his responses to questions. When Sanders finished his remarks, some in the audience broke into chants of “Ber-nie, Ber-nie, Ber-nie.”

AFSCME is celebrating the passage of a Nevada law granting state workers collective bargaining rights, and much of Saturday’s discussion focused on the priorities of union workers.

Ralston pressed Sanders on whether he could really guarantee that his Medicare for All plan would meet or surpass the quality of some of the deluxe health plans that unions have negotiated for their members.

Sanders pledged that Medicare for All would “absolutely” be equal or better to current union plans, noting that it would cover dental, vision and mental health free of charge at the point of service.

He also argued that Medicare for All would be a major boon for unions, since it would effectively take health care off the negotiating table during collective bargaining. The rising cost of health care has weakened unions’ power to negotiate pay increases and other benefits, Sanders observed.

“We will do what every other major country does: guarantee all of you health care as a right, so you can sit down and negotiate decent wage increases,” he said.

At another moment in the discussion, Ralston asked Sanders if he thought the private sector was “good for anything.”

Sanders, who describes himself as a democratic socialist, responded that it was a “good question.”

“The private sector is the sector of society which creates most of the wealth in America. And I want them to continue to do that,” he said.

He went on to argue that Medicare for All would actually help the private sector grow, because people would no longer rely on their employer for health insurance and would therefore be freer to take the risk of starting their own business.

The narrow focus of the private sector on profit, however, means that it is incapable of taking care of important social needs like affordable child care, Sanders argued.

“Obviously the private sector plays an enormously important role in creating wealth,” he said. ”The function of the public sector is to address the needs, and they are many, of the working class and low-income people of this country.”

This story has been updated with additional detail on the competing loan cancellation plans.

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Bernie Sanders On The Campaign Trail

Bernie Sanders On The Campaign Trail

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