Clinton Unveils Sweeping Student Loan Reform

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On Friday, I mentioned that Hillary Clinton was set to unveil a sweeping student loan reform package, and—reiterating all the caveats stated there about the centering of costly higher education as a universal solution—the details of Clinton's proposal look very solid, including relief for people with existing loans:

Clinton's so-called "New College Compact," detailed in three fact sheets shared with reporters, is the most detailed and expensive plan she has unveiled so far on her 2016 presidential campaign. "Students will be able to attend an in-state public university to get a 4-year degree without ever having to take out a loan for tuition," one fact sheet claims.

...Adam Green, the co-founder of the Progressive Change Campaign Committee, which has been one of the groups leading the effort for debt-free college, praised the plan. "Hillary Clinton's plan is very big and ambitious – leading to debt-free college and increased economic opportunity for millions of Americans," said Green, who has sometimes been critical of Clinton in the past.

"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," he added.

By closing undisclosed tax loopholes on the wealthy, Clinton plans to raise $350 billion over 10 years to invest in higher education. Of that, more than half would be used for grants to states, public universities, and non-profit colleges that keep costs low for students and meet several other requirements.

Another third of the money would go towards debt relief for students. Clinton's plan would allow every American who owes money to the government to refinance their loans at today's historically low interest rate. And she'd cut future borrowing costs by preventing the government from making a profit on loans to students.

The remainder of the money would fund innovative education models.

Clinton would also expand and streamline income-based repayment options, so borrowers would never have to pay more than 10% of their income. After 20 years, their remaining debt would be automatically forgiven if they kept up with payments. Pell Grants would help pay for living expenses beyond tuition.

Student borrowers would be expected to work at least 10 hours a week to contribute, while their families would continue contributing under the current income-based model. Clinton's plan would also expand a tax credit from $1,000 to $2,500 for families paying for college.

And to protect borrowers, her campaign says she would create a Borrower Bill of Rights and task the Elizabeth Warren-created Consumer Finance Protection Bureau with monitoring loans.

I really like the proposal to eliminate the federal government's ability to profit from student loans. I also really like debt forgiveness after a certain amount of time, although 20 years seems like a long damn time, and a percentage of income cap is terrific, but 10% seems too high to me, given that's 1/3 of the maximum recommending spending on housing.

But those changes alone, especially combined with the ability to refinance at lower rates, would make a tremendous difference in the lives of lots of people. Clinton has said that, on the campaign trail, she hears pleas to do something about student loan debt as much if not more than anything else.

Among the additional proposals in her "New College Compact" are: "eliminating the so-called 90-10 loophole, which leads many for-profit college to prey on veterans ... create a dedicated fund for Historically Black Colleges and Universities, and ... expand AmeriCorps from 75,000 to 250,000 members."

Good stuff.