Detailing Bernie's College Plan

[pinstikfartherin]

Hello ladies and gents!

I recently had some friends with a lot of questions about Bernie's Free College Plan, so I took the time to go over his legislation for it this year and make detailed notes about student loan refinancing, program requirements, etc. If you know someone who has questions about it, hopefully I've typed it up below and have it here:
http://deepsouthrebel.blogspot.com/2015/11/bernie-sanders-free-college-tuition-plan.html

His plan is much more detailed than the Wall Street tax, and here are the details and numbers.

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.

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.

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.

[MichMan]

1. Where does the other 1/3 come from?

Looks like a good plan, but curious where the remaining 1/3 will come from?

Couple more questions; Would the schools be able to raise tuition, fees and/or room and board costs significantly?

Also, if tuition is paid for, why would anyone decide to attend a Community College or less prestigious State Univ. instead of the high profile State U with the nice campus and high profile athletic programs?

[pinstikfartherin]

2. Good questions!

The other 1/3 comes from the states in the form of what they pay now for the public education budgets. They couldn't intentionally decrease the budget if they join the program to save money, but they'd just keep funding at current levels or increase it, and then the government would provide the other 2/3.

From what I gather, the plan is to get the allotments in place to eliminate tuition first. There will then be a determination of the median allotment per full-time equivalent student, and all public colleges would not be able to exceed that. If their tuition costs are over it, they'd have to decrease their costs to meet that allotment amount per student by a specific date.

I honestly don't know about room and board; that might be the only costs students have? But students are also still able to qualify for need-based grants because those cannot be eliminated. I'm sure that's not just for private college tuition and students that qualify could use it for room and board, textbooks, etc.

I can't give you a perfect answer for the last question. There will still be the colleges that are best in certain degree paths for students to choose from. There will still be standards for acceptance and GPA, ACT, and SAT scores to meet for admission. Just because it's free doesn't mean everyone will qualify to go to every school just like they don't now.

[MichMan]

3. Not sure

Not the way I understood it

#3 Ensure State expenditures for institution operating costs meet or exceed levels for the current year of 2015.

Operating costs are not tuition. This appears to mean that the current funding can't be decreased with the 1/3 of tuition costs an additional increased amount

[pinstikfartherin]

4. Sorry

I was reading straight from the legislation for that answer.

Beginning in fiscal year 2020, the Secretary shall determine the median allotment per full-time equivalent student made to all eligible States under this section for fiscal year 2019 and incrementally reduce allotments made to States under this section such that by fiscal year 2025, no State receives an allotment under this section per full-time equivalent student that exceeds the median allotment per full-time equivalent student made under this section for fiscal year 2019.

So, it looks like they get their initial allotments to put the program into place because that's obviously going to take some time, then they are capped at the median allotment per student for all the states. All states will only get the median allotment per full-time student by 2025. They won't yank it right away but decrease it so they adjust.

You might read that differently, but that's what I get out of it. What do you think?

[MichMan]

5. Well that clears it up then.

As an Engineer, I consider myself somewhat intelligent, but I can't figure out exactly what that is trying to say other than no state gets more $$/student than any other state.

Thanks for posting the details; I hadn't seen anything up to now.

[JDPriestly]

6. Great proposal. Congress will be able to change it, I suppose, and amendments will be added,

but it is a good proposal.

The room and board costs are probably the reason for the work-study programs. That's how I paid for mine in college. I worked. Tuition was cheap then, and my parents paid that I lived in co-op dorms where we cooked many meals but not all for ourselves and I worked all the way through until my student teaching semester. By that time, I was married, and my husband's GI bill carried us through. We learned to pinch pennies, used to buy the fish on Friday evenings from the grocery before it went bad. We really pinched and pinched our pennies.