Student Loans As Taxes

Abstract

The growth of college tuition and the corresponding rise in student loan debt have become major issues of public importance. Total outstanding student debt is at least $1.3 trillion, and tuitions keep growing, even while we arguably need to invest more in higher education to add skills and grow our economy. Sen. Bernie Sanders, I-Vt., has made higher education reform a major part of his Democratic presidential campaign platform, proposing a new financial transactions tax to pay for large grants to states that offer free tuition to public universities. His opponent, Hillary Clinton, has proposed grants to states to offer ‘‘no-debt-tuition,’’ paid for in part by repealing several tax expenditures. These and other plans would essentially increase federal spending on higher education through expanded progressive taxation.

JEL Classification: K34