Clinton’s $350 Billion College Tuition Plan Built on Rosy Assumptions
Policy + Politics

Clinton’s $350 Billion College Tuition Plan Built on Rosy Assumptions

Former secretary of state Hillary Clinton on Monday formally unveiled a $350 billion, ten- year proposal for addressing onerous college debt in a scheduled speech in New Hampshire, as she wades into a pocket-book topic of utmost concern to all middle class families.

With college tuition and room and board costs running well above inflation, student debt has tripled over the past decade, reaching $1.2 trillion in the first quarter of 2015. Clinton, the Democratic presidential front-runner and policy wonk, has crafted ideas for directly addressing the plight of students at state and city run public universities and colleges, and their families who are drowning in debt, as well as cracking down on lending institutions engaging in unscrupulous practices.

Related: The Surprising Reason College Tuition Is Crazy Expensive

The bulk of her program provides $175 billion in federal grants to the states as an incentive for slowing the rate of growth of tuition and finding novel ways to help families send their children to college without taking on added debt.

Students who commit to work at least 10 hours a week would be able to attend public universities and colleges without taking out added loans. Families would still have to deal with hefty college bills, but federal and state governments for the first time would pick up a substantial portion of the overall cost.

“Imagine what is possible in America if we tackle the runaway costs of higher education, make sure that students who start college can finish with a degree, and relieve the crushing burden of student debt,” Clinton campaign advisers said in a fact sheet describing the plan, according to The Wall Street Journal.

Barmak Nassirian, director of federal policy analysis at the American Association of State Colleges and Universities, told Politico that he views it as a “very positive plan” that touches on many facets of the higher education challenge. “It’s a pretty solid approach,” he said.

Related: Here’s an Economic Agenda for Hillary Clinton

Clinton’s approach is an amalgam of ideas from both the left and the right that – if fully implemented – would begin to rein in college costs and demand more transparency and accountability on the part of university officials and lenders. While it would put the nation on a path to major reforms in the financing of higher education, it would stop well short of Vermont Sen. Bernie Sanders’ call for a $70 billion a year proposal to provide free tuition to all students at public colleges and universities.

Even so, the plan, dubbed the “New College Compact,” is something of a three-cushioned political bank shot that likely would prove to be more aspirational than realistic. It is premised on highly optimistic assumptions that federal and state authorities can overcome political differences and work in concert to curb mounting college costs, bolster spending on higher education and finance the entire enterprise by increasing taxes on wealthier Americans.

Clinton is no stranger to highly complicated and costly policy initiatives, dating back to President Bill Clinton’s star-crossed Health Security Act of 1993 that the first lady designed and was unofficially nicknamed “Hillarycare.” Her latest college tuition proposal would count on enormous cooperation and good will from Republicans who are currently in control of the House and Senate and a majority of state legislatures across the country.  

Here is how it would roughly work:

  • The federal government would provide about $175 billion in grants to states in return for a guarantee that students would not have to take out new loans to cover tuition at four-year public colleges and universities. In order to achieve this goal, states would have to increase public spending on higher education, while also finding ways to slow the rate of growth of tuition.

Related: Hillary Clinton’s Achilles' Heel: Trust

  • The fresh infusion of federal grants would go for instruction and learning, and couldn’t be used for student activities or the athletic program. The states and universities would be encouraged to come up with innovative ways to save money and reduce the cost of education, such as increasing their offerings of online classes.
  • While vowing to increase overall spending on higher education and finding ways to slow the growth of tuition, the plan doesn’t require states to cap tuition. And students would still have to pay for their living expenses, which on average cost more than $17,000 a year.
  • Clinton would also embrace President Obama’s proposal for eliminating tuition for attending community colleges and ensuring that students will “never have to pay more than 10 percent of their income when repaying the loan.” 
  • The plan would be financed by imposing a cap on the value of itemized deductions that wealthy families can claim on their tax returns. It would constitute a massive $350 billion tax increase over the coming decade.

Clinton is certain to find considerable bipartisan support for measures to address college affordability as well as increased scrutiny of college loans policies and interest rates. However, in addition to stripping high-income earners of many of their tax deductions, there’s another huge problem.

Many Americans do not qualify for state-funded colleges and universities, which are often highly competitive because of their relatively low tuition costs compared with private colleges. Those students are relegated to private institutions for their college educations and therefore do not qualify for the loan forgiveness and other benefits outlined in the Clinton plan.

The average student debt for a bachelor’s degree recipient at a public 4-year college is $25,000. Debt for private 4-year college degree recipients is $33,000. Fixing the student debt problem in public institutions doesn’t fix the overall problem of the high rate of college dropouts. Here, from the National Student Clearinghouse, is a chart that sums up the problem: