Making College Debt Free

During a press conference in Washington D.C., democratic presidential candidate Bernie Sanders proposed six action steps to make education tuition and education debt free with the purpose to increase the affordability of higher education and help students graduate from college without a debt burden. However, as favorable as Sanders’s plan sounds, current debates prove it to be double-faceted. On the positive end of a spectrum, Sanders’s notion will create an influx in quality human capital by lifting the burden of expensive tuition and high loan interest rates, thus allowing more students to attend college, which in the long run will benefit the economy. On the other end, the means of revenue (the Wall Street Speculation Tax) needed for the

Consumer spending is a factor in calculating for economic growth (Y= Consumer spending+ Investment+ Government spending+ Net export). If college student—potential consumers—have little to no purchasing power, the economic growth for that period of time will decline because consumer spending plays a important integral in the United Sates’s economic growth. In addition, consumer spending leads to an increase in demand—which will in turn lead to more production, jobs, investments and tax revenue that gets put back into the economy, thus by removing the debt burden from students, the economy can become fruitful and healthy (“What Can We Do as Individuals to Help the Economy?”). Nonetheless, Sanders’s plan of tuition free education and debt free must be funded somehow. In response to the question of where funding for his plan of free tuition and debt free will come form, Sanders proposed the Robin Hood Tax as a mean to gain revenues for funding free education; this tax may negatively affect U.S.’s total

stocks and bonds. Using the speculation tax as a revenue source, an estimate of more than $150 billion can be raised within a year (Turbeville). Per contra, Tuberville states that FST will increase the cost of trades, discourage short-term trades rather than long-term investments all the while reducing the “profitability of high-frequency trading” and increasing market volatility because a computerized trading system can freely enter and exit the market. Moreover, the transaction tax will ramp up the cost of capital and “thereby reduce investment and growth” while increasing unemployment rate (Baker). John and Dubay also add that the financial transaction taxes thousands of high-waging jobs and drive a portion of an industry overseas. When industries go oversea, the “importance of the U.S. as an integral financial center would diminish and economic benefits that come along with the image of the U.S. as an important financial center would be greatly reduced (John and Dubay).In addition, when the EU implemented the financial transaction tax in 2011, the GDP fell by 1.7% (“Would a Financial Transactions Tax Hurt Europe's Economy? - Debating Europe”). The decrease in the GDP reiterates that the FST will also hurt the United States’ GDP if implemented. Using the financial transaction tax as a source of revenue seems to have many flaws,