(CNBC) - Student loan borrowers have reason to pay close attention to the 2020 presidential campaign.
Many of the Democratic presidential candidates have detailed plans to address what increasingly is called a student loan crisis.
Education debt in the U.S. has eclipsed credit card and auto debt. Today the average college graduate leaves school $30,000 in the red, up from $10,000 in the 1990s, and nearly 1 in 3 student loan borrowers are in delinquency or default. Research has shown that the debt makes it harder for people to buy houses and cars, start businesses and families, save or invest.
Sen. Bernie Sanders, I-Vt., plans to erase the country’s $1.6 trillion outstanding student loan tab, releasing 45 million Americans from their debt.
The $2.2 trillion plan would be paid for by a new tax on financial transactions, including a 0.5 percent tax on stock transactions and a 0.1 percent tax on bond sales. That levy would raise up to $2.4 trillion over the next decade, according to the senator’s office.
Under Sen. Elizabeth Warren's, D-Ma., proposal, borrowers with household incomes less than $100,000 would get $50,000 of their student debt forgiven.
People who earn between $100,000 and $250,000 would be eligible for forgiveness on a sliding scale – the cancellation amount reduces by $1 for every $3 a person earns over $100,000. And those who earn more than $250,000 would not get any debt relief.
The plan would likely be funded with a 2% annual tax Warren proposes to levy on accumulations of wealth exceeding $50 million, with an additional 1% levy on wealth exceeding $1 billion.
Former Vice President Joe Biden laid out some of his plans for student loan borrowers at a recent campaign stop at Keene State College in New Hampshire.
Those who earn less than $30,000 a year will be off the hook from making their monthly loan payments, Biden said.
Other borrowers on so-called income driven repayment plans would pay 5% of their discretionary income toward their student loans, the former vice president said, whereas now they pay between 12% and 20%.
Higher education expert Mark Kantrowitz said Biden’s plans don’t make any big waves.
“He does not propose to forgive student loans, even in a targeted manner,” Kantrowitz said. “They won’t attract much attention from millennials.
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