The cost of college has become a bi-partisan issue that is sure to garner some much-needed attention come 2016.
Presidential hopefuls are already gearing up to wage war against the student debt crisis. Many candidates, including Bernie Sanders and Martin O’Malley, have released their higher education reform proposals to both praise and questioning.
Hillary Clinton’s proposal, introduced today, has elicited a similar response. Clinton is focused on restoring the balance between students and the institutions that are supposed to assist them in their pursuit of a higher education.
Her plan, dubbed the “New College Compact,” would make college affordable for prospective students and relieve current or former students of their debt.
“Students and families are ready to do their part. Everyone else — the federal government, states and colleges and universities — needs to step up and do theirs,” said Clinton in her proposal.
While we love anything that will help students tackle their overwhelming pile of debt, these expensive proposals tend to lack a direct funding mechanism and are difficult to take seriously just yet.
The Crisis
Outstanding student loan debt has reached a staggering $1.2 trillion, with over 70 percent of Bachelor’s degree recipients borrowing money to pay for college. Those approximately 21 million students now owe an average of $29,400 per person come graduation time. Congrats grad!
Hill’s Proposed Solution
The former senator breaks up the New College Compact into two parts: Part one focuses on college affordability and part two on providing relief for current debt holders.
1. College Affordability:
Clinton wants to ensure that cost will not be the reason young Americans don’t attend college. Put simply, the senator plans to halt disinvestment in higher education, slowly increase investment over time and work cooperatively with public universities to cut costs and increase innovation.
Here’s how:
– Use grants to encourage states to get on board and guarantee students no-loan tuition at 4-year public universities and/or no payments at community colleges
– Further incentivize states to assist low- and middle-income students with their existing debt by offering them grants, also known as “cash,” in return
– Cut the interest rate on federal student loans
– Employ universal income-based repayment plans to prevent borrowers from defaulting on their loans. This will make students’ payment schedules contingent upon their income level and family size
– Invest in programs that would help students pay off their loans while providing public service to the nation
– Penalize and pressure colleges that produce high numbers of graduates unable to realistically repay loans into lowering their costs
– Heavily monitor for-profit schools, which are the most infamous contributors to the student debt crisis
2. Providing Relief:
Clinton also plans to lend a helping hand to those already trapped under suffocating student loan debt:
– Enable approximately 35 million debt holders to refinance their loans at the current federal interest rate (which she plans to lower)
– Instate an income-based repayment plan for current borrowers. This will guarantee that debt holders will never spend more than 10 percent of their income on student loan payments, and that college debt will be forgiven after 20 years
– Protect those who have been defrauded, such as the many students of the new defunct for-profit Corinthian Colleges. Clinton proposes streamlining the process by which students can cancel their debt
What’s the Damage?
The New College Compact plan would cost approximately $350 billion over the course of the next 10 years.
Clinton plans to shut down tax loopholes and expenditures for those in the high-income tax brackets. One half of that money will be put towards incentive grants for states and colleges to lower the costs, another third will be put towards relieving interest on student debt and the remainder will be used towards innovative projects to improve our dysfunctional higher education system. Ideas in the pipeline include legitimizing online courses and improving certification techniques.
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