Bernie Sanders' Free College Tuition Plan

Bernie Sanders currently has the College For All Act in congress, which gives the details that everyone is asking for in relation to his free college tuition plan. We've read the legislation, pulled out all the important details, and posted them here for quick reference. From the requirements for state participation to the details about his financial transaction tax to pay for it, you can find everything we know about his plan right here. (See the full text of the College For All Act here.)

State Requirements

The federal government will provide 2/3’s of funding to states that eliminate tuition costs at public universities. To qualify, states must:

1. Ensure each university's per-pupil instructional expenditures meet or exceed expenditures for the previous fiscal year.
2. Eliminate tuition for in-state students at public institutions.
3. Ensure State expenditures for institution operating costs meet or exceed levels for the current year of 2015.
4. Maintain State expenditures on need-based financial aid programs at a level that meets or exceeds that of the year 2015 (Ex: for private tuition or textbooks, room & board, etc.).
5. Ensure public institutions maintain funding for institutional need-based student financial aid to equal or exceed that of the previous fiscal year.
6. Ensure that no later than 5 years after the date of enactment that not less than 75% of instructors will be tenured or tenure-track faculty. (According to the American Association of University Professors, currently 50% are part-time and 76% of all appointments are non-tenure-track.)
7. Ensure institutions will not adopt policies to reduce enrollment.

Once tuition and fees have been eliminated, extra funding will be used to improve the quality of instruction and support services by:

1.     Expanding course offerings

2.     Increasing the number of full-time faculty

3.     Providing faculty support such as professional development opportunities, office space, etc.

4.     Compensating part-time faculty for work done outside of the classroom relating to instruction, such as holding office hours.

5.     Strengthening and ensuring all students have access to student support services such as academic advising, counseling, and tutoring.

6.     Any other additional activities that improve instructional quality and academic outcomes for students as approved by the Secretary through a peer review process.

States shall not use funds granted for the construction of non-academic facilities (stadiums and student centers), merit-based financial aid, or salaries or benefits to school administrators.

Student Loan Refinancing

Interest rates for loans made for the current academic year will be the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1 (The rate as of this posting was 0.135%) plus 2.3%, and it cannot exceed 8.25%. (So if based on this week, interest rates would be 2.435%).

Interest rates for loans for in school periods and grace periods will be the same as above, but plus 1.7% instead of 2.3% (so as of this posting it would be 1.835%).

Consolidation loans will be the equal to the lesser of the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher ¹⁄8 of 1 percent; or 8.25%.

Modification of interest rates for current loans will be allowed. Borrowers can modify the interest rate of the loan, and the interest rate would be equal to what the loan’s interest rate would be if originally dispersed on the date of modification (see previous paragraphs). The rate would be fixed for the life of the loan and not fluctuate. The borrower may elect to modify the interest rate at any time during the life of the loan.

For reference, here is the latest data for current student loan interest rates: 

Interest Rates for Direct Loans First Disbursed on or After July 1, 2015
Direct Subsidized Undergraduate Loans - 4.29%Direct Unsubsidized Undergraduate Loans - 4.29%Direct Unsubsidized Graduate or Professional Loans - 5.84%Direct PLUS Loans for Parents and Graduate or Professional Students - 6.84%

Work-Study Programs

Work-study programs will see gradually increased appropriations:

• $975,000,000 for 2016
• $1,500,000,000 for 2017
• $2,000,000,000 for 2018
• $2,500,000,000 for 2019
• $3,000,000,000 for 2020

(For reference, in 2011 FWS programs received $978,531,016 in appropriations.)

Funds may be used for job location development programs, but no more than 20 percent of the school’s allotment may be used for this purpose.

Simplified FAFSA

A single FAFSA form will cover the entirety of the student’s program for 2 to 4 years. Students who have a significant change to their financial situation will be required to resubmit to ensure they get the financial assistance that they need.

Funding

Tax on Trading Transactions

0.5 percent - Any share of stock in a corporation, Any partnership or beneficial ownership interest in a partnership or trust

0.10 percent - Any note, bond, debenture, or other evidence of indebtedness, other than a State or local bond the interest of which is excluded from gross income 

0.005 percent - Any evidence of an interest in, or a derivative financial instrument with respect to, any security or securities described previously; Any derivative financial instrument with respect to any currency or commodity including notional principal contracts; Any other derivative financial instrument any payment with respect to which is calculated by reference to any specified index.

The term ‘derivative financial instrument’ includes any option, forward contract, futures contract, notional principal contract, or any similar financial instrument.The term ‘specified index’ means any 1 or more of any combination of a fixed rate, price or amount; or a variable rate, price, or amount, which is based on any current objectively determinable information which is not within the control of any of the parties to the contract or instrument and is not unique to any of the parties’ circumstances.

No tax shall be imposed on any covered transaction with respect to the initial issuance of any security described:

• A note, bond, debenture, or other evidence of indebtedness which is traded on a trading facility located in the United States, and has a fixed maturity of not more than 60 days, shall not be treated as described.
• Any covered transaction with respect to which gain or loss is not recognized by reason of section 1058 of the tax code.

Check out arguments for and against the FTT here, here, here, and here.

Tax Credit for Trading Transaction Tax

In the case of an individual, there shall be a tax credit allowed for the taxable year in an amount equal to the tax paid during the taxable year. The taxes shall not apply to a taxpayer for the taxable year if the modified adjusted gross income of the taxpayer for the taxable year exceeds $50,000 for the individual or $75,000 for a joint return (or one-half of such amount in the case of a married individual filing a separate return). This number will adjust with inflation by multiplying by the cost-of-living adjustment. In other words, if those making $50,000 or less ($75,000 or less when filing jointly or married income is combined) are impacted by this tax, they will get a tax credit equal to what they paid for the year.

In Summation...

Sanders' plan is much more complicated than just the "tax financial transactions and everyone gets free college" people point to. Besides the expected basics, it has requirements for the allocation of extra funds and standards to benefit college professors that are increasingly getting by on part-time positions with no benefits. There is also a credit in place to offset middle-class impact from the financial transaction tax, and a solid way to decrease student loan rates for college graduates and current students with higher interest rates. While there are certainly other questions we may have about his plan, these details are important to comparing his plan with those of other candidates.