Hillary Clinton plans on Monday to begin rolling out one of the biggest-ticket policy proposals of her presidential campaign, a $350 billion plan aimed at reining in the ever-growing cost of college and help millions of borrowers struggling to repay student loans manage their debt.
Drawing on many of the same ideas and advisers on which President Barack Obama built his college affordability agenda, Clinton’s proposals—to be formally unveiled at campaign stops in New Hampshire on Monday and throughout the rest of the week—include federal incentives for states to boost their spending on public higher education, options for students to graduate from state colleges and universities without taking out loans, and pushing for a program to help borrowers refinance existing debt first pitched by Obama.
If Clinton is elected, this slate of higher education proposals would be a top priority in the first year of her administration, said a campaign official who declined to speak on the record before Clinton formally announced her proposals. Most of the programs would require congressional approval, as would the campaign's preferred way of funding them, by capping the value of itemized tax deductions for the wealthy.
The Democratic front-runner’s pitch will likely satisfy many education advocates on the left, and allow Clinton to offer a detailed plan to the many voters voicing concerns about student debt and college affordability on the campaign trail. Nearly seven in 10 of those graduating from college take out student loans and total student debt owed in the United States exceeds $1.3 trillion.
At the same time, Clinton's seizing of the college affordability issue could turn Republican presidential hopefuls—especially Governor Scott Walker of Wisconsin, Governor John Kasich of Ohio, and former Governor Rick Perry of Texas—into prime targets of her campaign. All three oversaw cuts in state higher education funding, though Kasich earlier this year proposed increasing state higher education funding and tuition.
The so-called New College Compact is designed to do the same thing for higher education that the Affordable Care Act did for health care, bending the cost curve, and requiring that non-educational costs—expenses like marketing a university or building a new football field—compose a smaller percentage of an institution’s spending.
Dueling Democratic Proposals
Clinton’s proposals are more targeted—and less expensive—than those put forward by her top opponent for the Democratic nomination, Vermont Senator Bernie Sanders, who in May put forward the College For All Act, which would eliminate undergraduate tuition and fees at all public colleges and universities, with the federal government pitching in two-thirds of the funding and one-third coming from the states. But his approach has drawn criticism from some student advocates, including the influential Institute for College Access and Success, because it would not provide support for students struggling with their living expenses. In all, it would cost $750 billion over a decade, funded by new taxes on Wall Street.
Another contender for the Democratic nomination, former Maryland Governor Martin O’Malley, is proposing making attendance at in-state public college and university debt-free for all Americans. His campaign hasn’t yet estimated how much his proposal would cost or decided on how to pay for it, spokeswoman Haley Morris said.
The Clinton campaign sees its proposal hitting a strong middle ground for the left, meeting the standards set by Demos and the Progressive Change Campaign Committee, two groups with close ties to Massachusetts Senator Elizabeth Warren while coming in at less than half the cost of Sanders’s pitch.
Clinton's Two-Pronged Approach
Aides divide Clinton’s proposals into two categories: ensuring that “costs won’t be a barrier” for prospective students at public colleges and universities, and that “debt won’t hold you back” after graduating or leaving college.
Programs in the first category would cost an estimated $200 billion and are centered around an effort to incentivize states to spend more on public higher education that would make it more possible for students to graduate without taking on loans for tuition and for those from low-income families to use Pell Grants to pay for their room and board costs. Students from higher-income backgrounds could graduate from college without incurring debt if they agree to join AmeriCorps, a program that Clinton wants to expand from 75,000 members to 250,000. AmeriCorps participants already get help repaying their student loans.
Forty-seven states spent less per student during the 2014-15 academic year than they did before the recession, a Center on Budget and Policy Priorities analysis found. Clinton hopes to stop and eventually reverse that trend by offering federal funding to states that set out plans to begin spending on their public colleges and universities. Legislatures and governors will have to take action to turn on the spigot of federal funding, potentially provoking the same kind of partisan fights in state capitols created by the Affordable Care Act’s option for states expand Medicaid.
It would also require public institutions to show that they are tightening their belts
“It gives them an incentive to find ways to reduce costs, like lower the cost of textbooks or have free online textbooks,” said Bob Shireman, a former deputy undersecretary of education in the Obama administration who has been advising the Clinton campaign since May. “Right now they have little incentive there because they just impose those costs on students.”
Other Obama administration alumni advising the Clinton campaign on higher education policy include Rohit Chopra, the Consumer Financial Protection Bureau's former student loan watchdog; Carmel Martin, former assistant secretary for planning, evaluation and policy development at the Education Department; and Zakiya Smith, a former senior adviser on education in the White House Domestic Policy Council. Sandy Baum, a professor at George Washington University and longtime adviser to the College Board, has also been involved.
Student Debt Refinancing
A second set of proposals, costing $150 billion in all, focuses on helping people who already have student debt repay it.
Clinton is following the lead of Warren and the Obama administration in calling on Congress to create a way for people who already have student debt to refinance their loans at the current federal rate. It would benefit an estimated 25 million borrowers, including most people with federal loans, as well as those who are current on their loans from private lenders.
Congress twice last year rejected bills to create a refinancing program but Shireman said he’s optimistic that Clinton could follow through. “It has come close and it's gaining momentum and is much needed,” he said.
“So many borrowers have been cheated by the student loan industry, just like we saw in the subprime mortgage market,” said Chopra, who left the CFPB earlier this summer. “There needs to be beefed up consumer protections to cut down on the conflicts of interest.”
Clinton is also proposing consolidating four income-based repayment programs into one, reducing confusion for borrowers and capping payments at 10 percent of discretionary income and forgiving any unpaid debt after 20 years. Republican Senator Lamar Alexander of Tennessee has proposed his own option for streamlining the income-based repayment programs and the Obama administration is working on its own option.
Targeting For-Profit Colleges
Clinton's plan would expand consumer protections, including creating a new Borrower Bill of Rights to inform people who take out student loans of their options; banning loan servicers and bill collectors that consistently break the law; and helping students who have been defrauded—like those who attended the Education Department-shuttered Corinthian Colleges—discharge their debt.
It would also expand the Obama administration’s efforts to root out bad actors in the for-profit college industry by strengthening the current administration’s gainful employment regulations and requiring colleges to take on some of the financial responsibility when borrowers default on their student loans.
“You need to cut down on the waste, fraud and abuse,” Chopra said. “That does mean holding some of the law-breaking for profit colleges accountable.”
Clinton would also seek to modify the “90/10 rule,” which limits revenues coming from federal sources to 90 percent of a for-profit’s overall revenues to include federal support from the Post-9/11 GI Bill in that 90 percent.