Hillary Rodham Clinton will propose an expanded government program Monday to address what she calls the crisis of student debt, her campaign said Friday.
A revised plan to make college more affordable and relieve the crushing debt students often accrue is a major plank of her policy platform and a key demand of young voters as well as the progressive wing of the Democratic Party. Clinton is not expected to go as far as some on the left want by calling for “debt-free” college. She is instead expected to present a detailed, and expensive, plan to increase funding for public colleges and universities.
Clinton’s campaign press secretary Brian Fallon said the policy proposals will come in a speech in New Hampshire on Monday. Fallon did not provide details of the plan.
But sources familiar with the plan who were not authorized to speak publicly said the proposal centers on an incentive system for states to expand investments in higher education. With grants from the federal government, participating states would be able to lower the cost of attendance at public colleges and universities.
Clinton is also expected to include President Obama’s proposal for free community college as a part of her platform. That $60 billion proposal calls for states to cover a quarter of the cost for more than 10 years.
Other key parts of the front-runner’s plan mirror proposals from progressive leader Sen. Elizabeth Warren (D-Mass.), whose policy staff sat down with Clinton’s campaign in recent weeks, according to sources. Clinton’s plan would let borrowers refinance their student loans to save money and lower the interest rates on federal loans, which can climb as high as 7 percent. Both initiatives would require acts of Congress.
Warren has led the charge in promoting college affordability as a major issue for the Democratic Party, calling for the elimination of student debt at public colleges. That debt-free college initiative, the brainchild of Demos, a liberal think tank, has been endorsed by Democratic presidential contenders Sen. Bernie Sanders (I-Vt.) and former Maryland governor Martin O’Malley.
Sanders has built on the initiative with his own ambitious plan to make four years of public college free by imposing a tax on transactions by hedge funds, investment houses and other Wall Street firms. Sanders estimates that his plan would cost $70 billion a year.
In the past several months, candidates, lawmakers and policy experts on the left have coalesced around a set of solutions to ease the burden of student debt. Addressing the rising cost of public education has become the foundation of most of their proposals.
There has been a seismic shift in the way public colleges are funded in the past 26 years. In 1989, tuition made up a quarter of the total education revenue at state universities. By last year, those dollars accounted for 47.1 percent of the money schools need to educate students, according to the State Higher Education Executive Officers Association. For every dollar the state withholds, public universities compensate by raising tuition, leading more families to borrow to cover the costs.
Nationwide, student debt tops $1.3 trillion, and young people struggle to find jobs that pay enough to cover their monthly loan payments.
Clinton speaks frequently about the cost that college debt imposes, citing real-life stories she has heard while campaigning of graduates who are unable to repay their loans and incapable of starting businesses or getting credit because they owe so much.
“We create vicious circles of debt for our youngest citizens who should be at the forefront of shaping the economy for tomorrow,” Clinton said while meeting students at the New Hampshire Technical Institute in Concord in April.
Clinton’s proposals would build on Obama’s program for government student loan repayment. The White House has recently proposed expanding one program, called Pay As You Earn, to cover an additional 6 million people.
The program caps borrowers’ monthly bills at 10 percent of their income and forgives the debt after 20 years of payment.
Income-driven plans are designed to prevent borrowers from defaulting on their loans, a problem faced by about 20 percent of people repaying college debt. Defaulting on student debt can severely damage a person’s credit rating, making it much harder to buy a car or a house.