With anxiety over college costs and student debt running high, Democratic presidential candidate Hillary Clinton unveiled a wide-ranging plan to make higher education more affordable at a campaign event today.
The proposal, estimated to cost $350 billion over 10 years, would rely on a federal-state partnership to reduce the price of a degree at public colleges, make a variety of changes to student loans, and provide grants to colleges that are improving their graduation rates and other student outcomes.
Clinton's plan—like those of her Democratic opponents—is already drawing criticism from some Republicans. And her strategy to pay for it by eliminating tax deductions for wealthier families is sure to be a hard sell to congressional Republicans. But should the ideas be put into action, here's what they'd mean for you:
1. Attending an In-state College Would Be Cheaper
The core of Clinton's plan would allow students to earn a four-year degree from state colleges and universities without taking out loans to pay for tuition. She'd do that by providing federal grants to states, as long as the states up their investment in higher education. As tuition at public colleges has climbed rapidly in the past several years, state spending per student has fallen by almost a quarter, according the the State Higher Education Executive Officers Association. Families are now responsible for roughly half the cost of college. This federal-state partnership would account for more than half the cost of Clinton's plan, about $175 billion.
2. But it Wouldn't Be Free
Unlike suggestions by progressive activists to create a completely free college education, Clinton's plan would require families to make a "realistic" contribution toward tuition costs. Along with money from personal savings and borrowing, the estimated family contribution would include student earnings from 10 hours of work a week. Also, states wouldn't be able to use money from Pell Grants in designing their loan-free tuition programs, so the federal grants for low- and middle-income students could still be used to help pay for living costs, such as room and board.
3. Applying for Aid Would Be Simpler
Calls for simplifying the 108-question Free Application for Federal Student Aid (FAFSA) have come from lawmakers on both sides of the aisle and from college access advocates who say the complexity of applying for aid keeps many low-income students from attending college. Clinton, too, backs simplifying the form, though she doesn't offer any details aside from letting families know earlier if they qualify for Pell Grants.
4. So Would Repaying Loans
Clinton's plan also calls for streamlining the repayment of loans and creating a Borrower Bill of Rights. Today's four, income-based repayment programs would be consolidated into a single plan with simple rules. All borrowers could enroll in a program that caps their loan payments at 10% of income and forgives any outstanding debt after 20 years of payments.
5. Current Borrowers Could Refinance at Favorable Rates
Graduates who earn a bachelor's degree now leave college with just under $30,000 in debt, on average. By allowing most current borrowers to refinance their loans at today's interest rates (4.29% for undergraduate student loans), Clinton says 25 million students would save an average of $2,000 over the life of their loans.
6. Future Borrowers Would See Lower Ones
For future borrowers, interest rates would be reduced "significantly," cutting the profits the federal government makes on student loans, a money source that's been criticized by some politicians, most notably Sen. Elizabeth Warren (D-Mass.).
7. Colleges Would Be Held to Higher Standards
Clinton wants colleges to be more transparent about student outcomes such as graduation rates, likely earnings, and debt load so families can make better-informed decisions when choosing a school. That argument is similar to one President Obama made in pushing for his ratings plan, which has since been scaled back after repeated criticism from some in higher education.
Clinton's New College Compact Plan would give additional grants to colleges that further reduce costs, serve a significant minority or low-income population, or invest in student support services that lead to higher graduation rates. (Currently, four in 10 students don't graduate within six years.)
On the other hand, Clinton would penalize colleges whose graduates aren't able to repay their loans. Her campaign doesn't offer specifics on requiring colleges to have "skin in the game," but Clinton does say she'll support bipartisan efforts to do so, such as a recently introduced bill that would require colleges to pay back to the government a share of the loans that their graduates aren't repaying.
The Democratic frontrunner, Clinton unveiled her plan in New Hampshire, where undergraduates have some highest average student loan debt in the nation, and where she faces considerable competition from Vermont Sen. Bernie Sanders, an independent who's running for the Democratic nomination. Sanders was one of the first candidates to announce a debt-free college plan. His plan calls for spending roughly $70 billion a year (two-thirds of that would come from the federal government) to make public colleges tuition-free.
The other major Democratic candidate, former Maryland Gov. Martin O'Malley, also has introduced a plan that would give students access to a debt-free degree from in-state colleges or universities, though his proposal doesn't have a price tag attached. O'Malley also wants to allow students to refinance their loans and to automatically enroll all borrowers in income-based repayment plans.