Campaign mantra: Costs won’t be a barrier, debt won’t hold you back
Student debt may seem far from the weighty issues with which presidential candidates must grapple—war in the Middle East, for example; climate change; persistent poverty; immigration. But student debt has an enormous impact on millions of individuals, and by extension affects the economy of the entire nation.
Hillary Clinton has made affordable higher education a central pillar of her campaign. That is one reason the AFT endorsed her. “Hillary’s New College Compact reasserts higher education as a public good and renews hope for millions of American families,” says AFT President Randi Weingarten.
“Imagine what is possible in America if we tackle the runaway costs of higher education, make sure that students who start college can finish with a degree, and relieve the crushing burden of student debt,” Clinton campaign materials suggest. If we can slash the eye-popping price tag on college education, we could have “families that can send their sons and daughters to college, graduates who can buy homes and start businesses without being held back by loans, and student parents who can balance the costs of quality child care with returning to school. We will see incomes rise and ensure Americans get ahead and stay ahead.”
Sharing this with AFT members, especially faculty and staff at public colleges and universities, is preaching to the choir. But word is spreading, and Clinton’s campaign continues to amplify the issue of affordability in very specific ways. The story may be familiar, but it is still powerful: More than 40 million Americans carry student debt. Millions of them are delinquent or in default. All together, we owe a staggering $1.2 trillion on loans we took out just to go to college. And that total has been accelerating since the recession. We owe more for education than we do on credit cards, car loans and home equity lines of credit. “All of this debt is not just unfair to borrowers,” says Clinton. “It holds all of us back.”
Her New College Compact would attack student debt and the high cost of attending school from several directions. It would ensure that students could attend college with no debt. And for those who are already in debt, it would lower interest rates and arrange for affordable ways to repay existing loans.
People take on debt because they know the importance of a college education. College graduates earn an average of $570,000 more over their lifetimes than high school graduates. “Parents who never had the chance to go to college themselves dream of seeing their kids get that degree, from the moment they’re born,” says Clinton in the New College Compact. “High schoolers—even middle schoolers—are taking college prep courses and studying for the SAT. Full-time workers are taking courses online, even if that means heading straight from an eight-hour shift to a pile of homework. If that’s what it takes to get a better job—to give their kids better than they had—then they’ll do it.”
They’ll do it—but it is daunting. States continue to slash higher education budgets, and colleges keep raising tuition. In-state tuition and fees for public colleges—those institutions that should be the most accessible, to the most people—increased by 42 percent between 2004 and 2014. During the recession, states spent $1,805, or 20 percent, less per student on average than they did seven years ago. To make up the difference, colleges typically passed the costs on to students with higher tuition. Meanwhile, incomes didn’t rise much at all, making it necessary for many people to take out loans—sometimes huge loans, loans that affect not just bank accounts but futures. “I’ve talked to people who have so much student debt, they’ve put off buying a house, changing jobs, starting a business—even getting married,” says Clinton, citing the litany of delays that are typical of those in debt. “College is supposed to help people achieve their dreams. But more and more, paying for college is actually pushing people’s dreams further out of reach. And that’s just wrong. It’s a betrayal of everything college is supposed to represent—and everything families have worked so hard to achieve.”
Making it better
The New College Compact would benefit an estimated 25 million borrowers, many of whom would save thousands of dollars in interest payments over the life of their loans. Some borrowers, with high-cost private loans, would see their interest rates cut in half or even more.
Clinton’s plan would ensure that responsibility for changing the high cost of higher education would be shared: Schools would have to control costs and be transparent and accountable to students. States would have to stop disinvestment in higher education. And the federal government would stop profiting off student loans.
The New College Compact covers two separate but related issues: costs and debt.
Cut those costs
“Students should never have to take out a loan to pay for tuition at their state’s public university,” says Clinton. That is her bottom line.
To make that happen, she supports President Obama’s plan to make community college free. Additionally, she would streamline the transfer process to four-year colleges, and promote the value of a high-quality two-year degree or certificate.
Clinton would allow low-income students to use their Pell Grants for living expenses, and would maintain programs like the American Opportunity Tax Credit, which provides up to $2,500 in tax relief for tuition and other expenses, for middle-class students. (Without renewal, this popular program will expire after 2017.)
Recognizing the crucial role historically black colleges and Hispanic-serving institutions play in engaging first-generation students, Clinton proposes dedicating a fund to modest-endowment private colleges that serve a high percentage of Pell Grant recipients. The schools could use that money to lower the cost of attendance and maintain the supports, like tutoring, mentoring and counseling, that they know will improve outcomes for their students.
Clinton also promises to help college students who are parents, “because when you help parents get an education, you’re helping their kids, too.”
And the New College Compact has provisions for students who perform national service, such as teaching in public institutions, working in national parks or serving areas hit by natural disaster: They will attend public universities debt-free, without having to take out loans for tuition, fees or living expenses.
Manage that debt
For those who already struggle with debt, the compact would feature refinancing to lower interest rates. Typical borrowers could save $2,000 over the life of their loans.
Income-based repayment would limit payments to 10 percent of a debtor’s income, and use time limits so that students would not have debt hanging over their heads for a lifetime. Even those with debt for private school would benefit with lower interest rates. The federal government, says Clinton, would never profit from a student loan.
The compact would help borrowers who are already in default, rather than exclude them from repayment plans. And colleges that require students to take out loans to cover tuition must show, in exchange for that federal money in their coffers, that their educational programs will lead to well-paying jobs for their graduates.
This element of the plan gets to the problem of for-profit colleges that prey on vulnerable students. Some for-profits take loan money from their students but fall far short of providing them with what they need to find good jobs when—and if—they graduate. Clinton’s plan would “crack down” on predatory schools, lenders and bill collectors with laws that protect students; it would require schools to prove their programs are effective, and demand transparency regarding success after graduation. It would expand support for government agencies such as the Department of Justice and the Veterans Benefits Administration to enforce laws against deceptive marketing, fraud and other illegal practices. And it would hold colleges accountable when their graduates are unable to repay their loans.
Make it simple, make it fair
From the beginning, Clinton’s compact would get more students to attend college by simplifying the FAFSA (Free Application for Federal Student Aid) and providing early Pell Grant notification. Removing those barriers could encourage students who are otherwise overwhelmed by the process to apply to college in the first place. Clinton would keep students in school with initiatives like TRIO and GEAR UP, and by investing in student support, high-quality child care, emergency financial aid and other interventions that improve completion rates.
Clinton also has a protective eye out for those who serve in the military. She would strengthen the GI Bill so that those veterans who qualify for fully paid tuition and fees at public schools, plus a stipend for books and a housing allowance, would get the support they need to avoid being defrauded of those benefits. Too often, vets enroll in deficient programs or lack the counseling they need to stay in school; the compact would fix that.It would also close the “90-10” loophole that for-profit schools use to prey on veterans and get at their federal benefits, and would expose graduation/program completion rates so that every vet has an informed and successful college experience. And, for every college, federal money would be available only for student costs—not marketing or high administrative salaries.
Expanding the service model beyond the military, Clinton’s plan also supports community service, through an expanded AmeriCorps. Her compact would grow AmeriCorps from 75,000 to 250,000, sending more people out to work at nonprofits, schools, public agencies, and community- and faith-based groups. Those people would benefit with debt-free in-state public college or university enrollment—tuition and expenses included—and loan forgiveness upon completion of service for those already in debt or for those at private institutions.
The compact also promotes innovation, expanding the concept of diplomas as the only goal and instead including badges, certificates and other ways to recognize educational accomplishment tied to rebooting careers and participating in lifelong learning. We’re talking about everything from specific training tied to manufacturing to weekslong coding boot camps to simple online coursework, as long as it is well-designed and well-supported.
Making it work
Clinton has proposed the New College Compact as a group project: “Everyone’s going to have to step up to the plate,” she says. “We can’t fix the problem of rising costs and rising debt just by throwing more money at the problem.”
Every stakeholder will play a part. “States will have to start investing in education again,” she says. “Colleges will have to do better by their students.” Families will make realistic contributions for costs beyond tuition, and students will contribute based on 10 hours per week of work.
The plan, of course, comes with a price tag of its own: about $350 billion over 10 years. It would be covered by closing tax loopholes for the nation’s wealthiest taxpayers.
Most of the money—more than half—would pay for grants to states and colleges, to support students so they don’t need to take out loans for tuition and living expenses, and it would relieve debt for students who commit to national service.
About a third of the funds would cover relief on interest on student debt. With it, every American with outstanding public debt would be able to refinance their student loans at current interest rates.
The remaining funds would pay for innovative investment in higher education, such as lifelong learning models and support for student parents.
When discussing the New College Compact, Clinton has used her own family as an example. Her grandfather worked in a lace mill and never went to college. Her father did attend college and was able to start a small business. Her parents saved so that she could go to college herself.
Now she is continuing the tradition, proud of having supported her daughter, Chelsea, through graduation, and anticipating that some day her grandchild will also benefit from college. Her New College Compact is designed to extend that privilege to every American.