Despite her various titles over the years, Hillary Clinton is at heart a policy wonk. That quality is especially useful now when, as a Democratic presidential candidate, she can bring substance to a race that has become circus-like on its crowded Republican side. Clinton’s ability to fortify the national debate was demonstrated last week by her proposal for confronting the burden of student debt.
The Clinton plan, dubbed the New College Compact, proposes spending $350 billion over 10 years to help 40 million Americans with student loan debt and to prod states into holding down the cost of public college tuition. The plan takes on an urgent problem that state and federal lawmakers have failed to address, though President Obama has made progress against it through executive orders.
Republicans reflexively balked at the price of Clinton’s plan, but the cost is appropriate to the task.
If the nation is going to ease the economic drag and personal burdens caused by $1.2 trillion in student loan debt – a debt that now exceeds all the nation’s credit card debt – it is going to require a large national expense. But it is an expense a great nation can afford. The United States spent more than $1.7 trillion on the Iraq War. Surely it can spend $35 billion a year to confront a danger within its borders, a burden that is hobbling the rise of the next generation and sapping the recovery from the Great Recession.
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Clinton’s plan focuses on the two drivers of the growing debt. No. 1 is states cutting back on the share of public college costs they’ll pay, a trend that transfers college costs to students and fuels more borrowing. In North Carolina, the UNC system has absorbed $697 million in cuts over the past five years. Since 2008-09, state appropriations have fallen from 72 percent of UNC revenue to 62 percent, though North Carolina’s share remains among the nation’s highest. Debt driver No. 2 is the federal government’s sticking with high student loan interest rates. Many older borrowers are locked into rates that can be more than double the current rate of 4.3 percent.
Clinton’s plan would tie federal higher education funds to a state’s ability to guarantee that students can graduate from a public college loan-free. That would reverse the trend in declining state support and strengthen efforts to hold down public college costs.
At the individual level, the plan would allow borrowers to refinance their high-interest loans. The change would cost the federal Treasury, but it would be a stimulus for the economy. Sen. Elizabeth Warren, D-Mass, a fierce critic of the government profiting heavily from student loans, estimates that the refinancing would help 25 million people save an average of $2,000 each.
There are gaps in the plan. But it offers solutions and sets the ambitious goal of taking the red ink out of a college degree.