Hillary Rodham Clinton wants to radically change the way public higher education is financed, allowing students to earn a four-year degree without taking out a single loan.
Clinton’s plan, which she is set to unveil Monday in New Hampshire, would also make community colleges free and ensure that those with student loans wouldn’t be required to pay more than 10 percent of their income in debt payments, according to a summary of the plan the campaign shared with the Globe.
The plan would be paid for by limiting the value of itemized tax deductions for the wealthiest taxpayers, and increasing unspecified taxes. The overall cost: $350 billion over 10 years.
The plan addresses one of the core issues important to the Democratic base and comes as some liberal groups have been growing impatient that Clinton hasn’t unveiled more detailed policies so far in her campaign. The other two serious contenders for the Democratic nomination put forward detailed student debt plans months ago.
Clinton’s plan borrows some ideas from Senator Elizabeth Warren of Massachusetts. It would allow those who currently carry debt to refinance loans at current rates. Clinton’s campaign estimates that allowing refinancing would save 25 million borrowers roughly $2,000 a year over the life of their loans. Warren’s first bill as a senator called for reducing the interest rates that government charges student borrowers.
According to the Clinton plan, the government should “never profit” from paying for living costs at college — under the current system, the federal government does make money off of student debt. “This one change, if enacted today, would cut interest rates nearly in half,” it states.
Clinton remains the formidable front-runner in the Democratic presidential contest, but during the summer she’s seen her poll numbers — particularly in New Hampshire — slip as Senator Bernie Sanders of Vermont has drawn huge crowds with his liberal message. One of his biggest applause lines comes when he talks about his plan for debt-free education.
Groups on the left were already lining up Sunday night to praise the Clinton proposal and take credit for their role pushing Democratic candidates to address the issue. Demos Action and the Progressive Change Campaign Committee scheduled a media call for Monday to “share thoughts on Clinton’s proposal and discuss how the proposal could benefit millions of Americans.”
There’s more than $1.2 trillion in outstanding student debt in the country, a figure that’s doubled since the start of the financial crisis. Borrowers owe an average of $28,400 in federal and private loans combined, according to the Project on Student Debt by the Institute for College Access & Success.
The Clinton proposal involves creating what she’s calling a New College Compact that would provide grants to states willing to guarantee no-loan tuition at their public colleges and universities. The colleges would also have to reduce costs. Clinton’s proposal notes that in the past decade, tuition has skyrocketed as universities have passed on costs to students rather than finding cuts.
It also aims to penalize predatory lenders and institutions that repeatedly charge borrowers too much. The Consumer Financial Protection Bureau would be given new unspecified powers to prevent students from being misled. Lenders that repeatedly overcharge borrowers would be banned from servicing federal loans.
The plan appears designed to appeal to the younger voters who flocked to Barack Obama, helping secure his path to the White House twice.
Sanders’s student debt plan calls for zero tuition at public colleges. Former Maryland governor Martin O’Malley has also introduced a debt-free college plan that calls for public colleges and universities to freeze tuition rates.