Sen. Bernie Sanders announced a plan in June to erase the country’s $1.6 trillion outstanding student loan, giving him leverage over the other candidates on the higher education policy debate in the 2020 Democratic presidential primary.

Sanders’ proposed bill dubbed as the “College For All Act” aims to release all 45 million Americans from their student debt. Sanders’ plan would also include making two and four-year public colleges and universities tuition and debt-free. That includes trade schools and apprenticeship programs.

Appealing as it may sound to hear the possible cancellation of student loans, here are some things you need to know.

Qualifications for the student loan forgiveness

What’s the scope of the College For All Bill and who are qualified to be granted loan forgiveness?

The Democratic presidential candidate wants to forgive every single dime of the $1.6 trillion student loans and that includes both federal and private student loan debt. In his plan, everyone receives student loan forgiveness—all 45 million Americans.

Sanders is not alone in pushing this campaign as another Democratic presidential hopeful, Sen. Elizabeth Warren (D-MA) also wants to cancel student loan debt. However, Warren’s plan only includes cancelling “$50,000 in student loan debt for every person with household income under $100,000 and cancel substantial debt for every person with household income between $100,000 and $250,000.”

How Would Bernie Sanders Pay For It?

Sanders will fund his student loan forgiveness plan through a new tax on Wall Street financial transactions, which he expects could raise more than $2 trillion over the next 10 years.

Sanders claims that once he gets elected president, he could forgive student loan debt without approval from Congress, but how true is that?

While it’s true that the Education Department can cancel federal student loans due to death, disability, or fraud. In the case of a widescale student loan forgiveness plan like Sanders’, it might not be possible to push through without it going through Congress first. Plus, it’s not within presidential powers to levy taxes, that power rests with Congress. 

Drawbacks of Student Loan Forgiveness

Unlike Sanders and Warren who are strong supporters of student loan forgiveness, other presidential candidates such as former VP Joe Biden and former New York City Mayor Mike Bloomberg, including President Donald Trump are all against massive student loan forgiveness.

They believe that such plans would be too burdensome to taxpayers and would lead to negative effects in the future. Some problems may include:

• Higher student loan debt if the plan fails to follow-through
• Unfair benefit of the wealthy borrowers
• Lower revenues for the federal government

Instead of a widescale student loan forgiveness, Trump has advocated the improvement of income-based repayment plans to simplify student loan repayment and forgiveness. 

What You Should Do Now

As the future of your student loan debts are still unsure and in the works, you have to make sure that you have everything planned out. Both in repaying and settling your student loans and your personal loans. Remember, it’s always better to be prepared and informed when it comes to fixing your finances