By Jonathan Easley and Jesse Byrnes - 08-10-15 09:00 AM EDT
Hillary Clinton is unveiling a $350 billion plan aimed at cutting the cost of college tuition and reducing the debt burdens for those struggling with high-interest student loans at a series of events across New Hampshire on Monday and Tuesday.
Clinton has stops planned at middle schools, high schools and community colleges across the first-in-the-nation primary state this week, where she’ll detail a “New College Compact” with the primary aim of allowing students to attend in-state colleges or universities without ever having to take out a loan.
About half the cost of Clinton’s $350 billion plan will go towards grants meant to ensure “tuition without borrowing” through federal cash incentives provided to states.
Under Clinton’s plan, students would also get free tuition at community colleges; an initiative that has also been floated by President Obama.
“These grants will ensure tuition without borrowing and further debt reduction at 4-year public colleges, support private non-profit colleges that keep costs low and provide value, and relieve debt for students who commit to national service,” the plan states. “These new grants will be paired with holding states and colleges accountable for bringing down costs.”
The Clinton plan also aims to cut interest rates on student loans to ensure that the federal government does not profit off of them.
Interest rates on current loans could be reduced by allowing for refinancing at current federal rates; a move Clinton says will save thousands of dollars in interest payments over the lives of loans for an estimated 25 million borrowers.
It would cap payments at 10 percent of income and forgive debts for those who have been paying down the same loan for 20 years.
“This includes allowing every American with outstanding public debt to refinance their student loans at today’s low interest rates, cutting interest rates to reflect the government’s cost of borrowing, and making it far easier for students to enroll in income-based repayment that limits crushing debt,” the plan states.
The third leg of the plan provides incentives for colleges to modernize their enrollment and payment systems, for providing new avenues of learning through extension programs, and for boosting graduation rates.
Clinton contends her plan could be paid off in 10 years by closing tax loopholes and deductions often leveraged by the wealthiest Americans.
Progressive groups lauded the proposal.
“Hillary Clinton's plan is very big and ambitious — leading to debt-free college and increased economic opportunity for millions of Americans,” said Progressive Change Campaign Committee cofounder Adam Green. “The center of gravity on higher education has shifted from tinkering with interest rates to making college debt free — and Clinton's bold proposal is emblematic of the rising economic populist tide in American politics.”
Republicans immediately denounced the plan as another big-government scheme by Democrats that would do little but raise taxes.
Former Florida Gov. Jeb Bush, who led an education foundation after leaving the governor’s mansion, said the proposal would “raise taxes, increase government debt, and double-down on the failed Obama economic policies.”
“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,” he said. “We need to change the incentives for colleges with fresh policies that result in more individualization and choices, drive down overall costs, and improve the value of a college degree, which will help lead to real, sustained four-percent economic growth.”
The Clinton proposal comes amid a flurry of similar proposals from Democratic presidential candidates seeking to appeal to the younger generation of voters burdened by debt from higher education.
In July, Democratic presidential candidate Martin O’Malley released a debt-free college tuition plan. The former Maryland governor’s plan would freeze college tuitions, tie loan costs to income, and expand federal student grants.
“Debt-free college is an issue where Governor O'Malley has led, not followed,” O’Malley’s campaign said in response to the Clinton plan. “He is also the only candidate in the race who actually has a record of making college more affordable. While many states were making deep cuts to higher education during the recession, Governor O'Malley made Maryland the only state in the nation to actually freeze tuition for four years in a row.”
Vermont Sen. Bernie Sanders has also released a plan, but his is far to the left of both Clinton and O’Malley.
Under Sanders’s plan, the federal government and states would partner to foot the full cost of public colleges, making them tuition-free for students. That’s estimated to cost $700 billion, or roughly half of what Clinton is proposing.
This story was updated at 2:09 p.m.
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