Americans now shoulder $1.2 trillion in student loan debt, a rate that has tripled over the past decade, according to studies.
Democratic presidential contender Hillary Clinton aims to end that debt, announcing a sweeping proposal to provide millions with financial opportunities for college, and reduce interest rates for those shouldering high-interest payments.
“No family and no student should have to borrow to pay tuition at a public college or university,” Clinton said at a campaign stop on Monday, August 10, at a high school in New Hampshire. “And everyone who has student debt should be able to finance it at lower rates.”
Clinton’s plan, which would change the way millions of Americans pay for college, takes pointers from various left and right views, and even expands a program first enacted by her husband. The proposal, called the New College Compact, includes ideas already being discussed in Congress and for which the groundwork has been laid out by the Obama administration.
The New College Compact would cost $350 billion over 10 years, coming from cutting tax deductions for the wealthy. Clinton would pay for the plan by capping the value of itemized deductions wealthy Americans can take on their tax returns.
The expansive program will also include new refinancing options for those already swimming deep in debt. Essentially, families would still be required to contribute funds, but students would not have to take out loans to attend public schools.
“We need to make a quality education affordable and available to everyone willing to work for it without saddling them with decades of debt,” Clinton said at Exeter High School. “I want every parent to know that his or her child can get a degree or you can get one yourself.”
A senior campaign official called the combination of different ideas, and the intense emphasis on the issue of paying for college a “bold transformation of how we would do higher education financing in our country.”
Under the plan outlined by Clinton advisers on Sunday, Aug. 9 about $175 billion in grants would go to states that guarantee students would not have to take out loans to cover tuition at four-year public colleges and universities. In return for the funding, states would have to end budget cuts that would increase spending over time on higher education, while still working to slow the growth of tuition costs (such as Pell Grants and scholarships for low-income students).
The compact’s base goals are to allow students to attend a four-year public college without taking out loans for tuition, or attend a community college without tuition. Clinton’s proposal also aims to push states to spend more on higher education, encourage institutions and universities to cut costs while improve enrollment and graduation rates, and reward hard work and innovation.
“This is a real political organizing opportunity,” the senior official said. “We have heard everywhere [Hillary Clinton] goes, literally everywhere she goes…from young people who are behind held back or families who have no idea how they’re going to pay for college.”
In addition to refinancing and budgeting, the New College Compact would also expand other programs, such as numbers for veterans pursuing degrees, for-profit campuses, and the volunteer national service program AmeriCorps, first created by President Bill Clinton.
Barmak Nassirian, director of federal policy analysis at the American Association of State Colleges and Universities, said he overall thinks that “[this] is a very positive plan touching on many pieces of the puzzle…it’s good that it encourages state investment in colleges and universities. It’s a pretty solid approach.”
To reach these goals, however, would need great support from state governors and legislators–a tall order, with Congress being run by Republicans, who have argued that public college tuition is largely “more affordable” now.
“We don’t need more top-down Washington solutions that will raise the cost of college even further, and shift the burden to hardworking taxpayers,” said former Florida Gov. Jeb Bush, another GOP candidate.
“Members of the Senate education committee are working on a plan to help students graduate more quickly with less debt,” a Republican aide said, “Students, taxpayers and voters should react with great skepticism to any proposals that would amount to a Washington takeover of higher education, and jeopardize the autonomy and independence that has made our higher education system the best in the world.”
“[Clinton’s] kinds of ideas usually go hand in hand with higher state taxes, increased costs, and fewer choices,” the aide continued.
But by revamping the federal student loan program to lower borrowing costs for both people holding existing debt and future college students, her plan will help an estimated 25 million existing borrowers by allowing them to refinance or make income-based payments, echoing an earlier Obama initiative.
Mr. Obama’s efforts to lower student debt burdens respond to a sharp increase since the recession in borrowers who are defaulting on their loans, which in turns threatens to damage both their credit the general economy. As many as one in three borrowers whose payments have come due, are at least a month delinquent on their student-loan bills, research shows.
Overall, tuition and fees for in-state residents at public colleges nationwide have increased by more than 40 percent since 2004, after adjusting for inflation.
According to the Pew Research Center, about 43 million Americans owe student debt–including 37 percent of households headed by young people ages 40 and under. Education-related debt is now the highest form of household credit outside of mortgages, surpassing even credit card debt. (with reports from Wall Street Journal, Politico, New York Times)