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Free college for families earning under $125,000: Experts give the new Bernie Sanders bill 'a pretty good chance'

"The bill is more likely to pass this year than in previous sessions of Congress."

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U.S. Sen. Bernie Sanders (I-VT) speaks to reporters in the Senate Subway during a roll call vote on April 13, 2021 in Washington, DC.
Stefani Reynolds | Getty Images

Sen. Bernie Sanders, I-VT, and Rep. Pramila Jayapal, D-WA, have proposed legislation that would make college more affordable for many Americans.

Dubbed the College for All Plan, the bill would make community college free for everyone and four-year public colleges tuition-free and debt-free for students from families that make up to $125,000 per year. Private, nonprofit minority-serving institutions, like historically Black colleges and universities, would also be tuition-free for students of families making under $125,000.

Additionally, the bill would double the maximum Pell Grant to $12,990 and expand Pell Grant eligibility to "Dreamers," undocumented immigrants brought to the country as children.

The likelihood of the bill passing depends on a few factors, expert says. Here's what you need to know.

College for All plan has 'a pretty good chance'

In 2017, Sanders and Jayapal put forward a proposal to make colleges and universities tuition-free for families that earned $125,000 per year or less that didn't gain traction. The situation looks different now. "The bill is more likely to pass this year than in previous sessions of Congress," says higher education expert Mark Kantrowitz.

Democrats hold a majority in the House of Representatives and an edge in the Senate, where there are 50 Republican senators, 48 Democratic senators, and two Independents who caucus with Democrats. If all 48 Democrats and both Independents voted to pass the legislation, Vice President Kamala Harris would likely side with her party in the tie-breaking vote.

The bill seems to fit with President Joe Biden's agenda, too. Last fall, Biden campaigned on providing two years of debt-free community college, including for Dreamers, doubling Pell Grants, and making public colleges and universities tuition-free for all families with incomes below $125,000.

"Given that there there is alignment between this bill and goals of this administration ... there's a pretty good chance of it passing," Kantrowitz says.

Would taxes go up to pay for 'free college'?

Sanders and Jayapal's proposal calls for the federal government to shoulder 75% of the cost of free college at public schools, with states paying the remainder. Should there be an economic downturn, the federal government's share would increase to 90%.

Sanders says the plan will be paid for by a tax on Wall Street. A separate bill, called the Tax on Wall Street Speculation Act, proposes a 0.5% tax on stock trades, a 0.1% tax on bonds and a 0.005% tax on derivatives. 

The proposed tax might be "more palatable" to conservatives than previous proposals, which called for taxing the top 1% of earners, says Betsy Mayotte, president of The Institute of Student Loan Advisors.

"It's all going to hinge on how [senators] feel about the method of payment for the proposal," she says. "I think it's hard for either side of the aisle to push back on a proposal that maintains access and affordability to higher education without accruing debt."

The bill is more likely to pass this year than in previous sessions of Congress.
Mark Kantrowitz
higher education expert

Democrats are pushing a number of legislative priorities this year, from infrastructure to climate change to voting rights. The proposal could live or die based on which other bills they prioritize and whether proposed tax increases like the Wall Street tax can cover the costs of the many bills on the Senate floor, Kantrowitz says.

"They've got the infrastructure bill, they have student loan forgiveness bill, they have this bill," he says. That adds up to "a lot of expensive items on their agenda." The infrastructure bill alone has a $2 trillion price tag.

Existing student debt may also be forgiven

The most recent stimulus package, known as the American Rescue Plan, laid the groundwork for student debt cancellation by making it tax-free through 2025.

Although Biden initially said he didn't support forgiving more than $10,000 per person in student debt, he did request that Education Secretary Miguel Cardona prepare a report on whether Biden has the legal authority to cancel up to $50,000 in student debt per borrower.

Many Democratic lawmakers are continuing to push Biden for more aggressive action on student loan debt. Democratic leaders like Sen. Elizabeth Warren, D-MA, and Senate Majority Leader Chuck Schumer, D-NY, have argued that $50,000 of debt cancellation would significantly reduce the racial wealth gap and ease financial burdens for those most affected by the pandemic: recent graduates, women, Black and Latino Americans, and older borrowers.

It's hard for either side of the aisle to push back on a proposal that maintains access and affordability to higher education without accruing debt.
Betsy Mayotte
president, The Institute of Student Loan Advisors

It's likely that Biden will "stick to his proposal" of eliminating $10,000 of student debt, Kantrowitz says.

"Some lawmakers have been calling for $50,000 [to be forgiven]," he says. "That would cost as much as $1 trillion. If you limit [the bill] to borrowers who owe $10,000 or less, that will cost a lot less than $1 trillion."

Scaling back on student loan forgiveness, he says, might allow lawmakers more room to reduce the cost of higher education.

What the College for All plan means for students

Prospective students and their families should not expect the bill to pass exactly as proposed, if it passes at all. "Often, the details are a lot different than the summary sheets you read initially," Kantrowitz says. And even if the bill does pass, "most likely, it won't be effective until the 2022/2023 year at the earliest."

Students or families of students who are applying to colleges this year should operate under the assumption that they will have to pay college tuition, Mayotte says.

"Nobody should be making any decisions based on these proposals right now," she says. "It is way too early in the process to make a decision either way."

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