Hillary Clinton wants to spend $350 billion to make college more affordable for current and future graduates.
On Monday, the Democratic presidential candidate unveiled a plan called "New College Compact,” which would use a combination of grants and interest rate reductions to eliminate or reduce the cost of college, chiefly for those who attend in-state schools or community college. About $200 billion would go toward current or future students, with another $150 billion allocated for interest rate reductions on existing debt. The $350 billion would be spent over a period of 10 years.
"Higher education should be a right, not a privilege for those who can afford it," Clinton, a former New York senator said in a video clip that her campaign tweeted on Monday morning.
Clinton’s plan is targeting a key demographic: debt-burdened young Americans who could be a key portion of her voting base. But most of her ideas would have to get through Congress first, as would her plan to fund them, so any actual changes are a ways off.
The cost of college has become an albatross for the so-called Millennial generation. American in the 18-to-34 age bracket need higher education for well-paying jobs more than previous generations, but they often leave school saddled with high-cost debt.
The cost of college tuition in America has climbed 1,100 percent since the start of the '80s, and now averages $23,410 at an in-state public school. The average 2015 grad will have finished college with $35,000-worth of student debt, the most ever even when adjusted for inflation, according to the Wall Street Journal. More than 70 percent of bachelor’s degree recipients will graduate with a student loan, compared with less than half two decades ago.
Clinton’s plan includes the following for current or future college students:
- Allowing them to get a four-year degree from an in-state public university "without ever having to take out a loan."
- Making community college tuition free.
- Ending the federal government’s practice of profiting from student loans.
- Increasing federal grants to encourage states to invest in higher education, tying funding levels to outcomes .
- Setting up a fund to help "modest-endowment" private colleges where Pell Grant recipients comprise a large share of the student body lower the cost of attendance.
For debt holders, Clinton's plan would allow individuals to refinance obligations at current rates — a proposal first brought to the Senate floor by Elizabeth Warren, a liberal Massachusetts Democrat. Clinton would also ensure that interest rates on government-backed student loans stay low going forward, and would cap post-grad payment plans at 10 percent of income.
Clinton's debt proposals don't do as much to tackle the notorious debt issues associated with private, for-profit schools. However, her proposal to end government profits on loans to private schools and to refinance private debt do address it. She also says she will continue prosecutions of private institutions that may be committing fraud.
According to nonprofit group the Institute for College Access and Success, 88 percent of students attending four-year for-profit schools took out student loans, and end up on average with $39,950 in debt—43 percent more than 2012 graduates from other types of four-year colleges.
The "compact" would be financed by cutting tax breaks for wealthy Americans – something that could be tough to achieve politically in Congress.
Her plan, while ambitious, is not quite as radical as Sen. Bernie Sanders' $750 billion "College For All" plan, which would make tuition free at all public schools, paid for through a new Wall Street tax. Sanders, a democrat from Vermont, is also running for president.
However, as Bloomberg's Jennifer Epstein points out, Clinton’s plan puts pressure on GOP contenders running for president, like John Kasich and Rick Perry, who cut college spending while they were in office as governors of Ohio and Texas, respectively.
Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.