Sanders, an independent U.S. senator from Vermont, said his plan would wipe out college debt for 45 million Americans and be funded with a tax on stock, bond and derivatives transactions that would raise about $2.2 trillion over 10 years.
The proposal builds on Sanders' longstanding call to make public universities and colleges tuition-free, an issue he has highlighted since his first presidential run in 2016. He said student loan debt was economically crippling young Americans.
"This proposal completely eliminates student debt in this country and ends the absurdity of sentencing an entire generation, the millennial generation, to a lifetime of debt," Sanders said at the unveiling of his U.S. Senate bill.
"The American people bailed out Wall Street. Now, it is time for Wall Street to come to the aid of the middle class of this country," he said.
Other liberal Democrats, including presidential rivals Elizabeth Warren and Julian Castro, have taken up the call and proposed smaller student-debt cancellation plans.
Warren has proposed canceling $50,000 in student loan debt for anyone with annual household income under $100,000 and give substantial cancellation to those between $100,000 and $250,000. She proposed paying for the plan with a tax on wealthy families.
The Sanders proposal comes two days before the first debates involving candidates seeking the Democratic nomination for the right to challenge Republican President Donald Trump in November 2020. Ten candidates each will meet in back-to-back debates on Wednesday and Thursday nights in Miami, Florida.
Sanders appeared at a news conference with U.S. Representatives Ilhan Omar and Pramila Jayapal, who joined him in proposing the legislation.