With student loan debt currently at $1.4 trillion in the United States, the cost of higher education and the burden of student loans is a major point of contention. Presidential candidate Hillary Clinton has released a “New College Compact” outlining her approach to education and how she would change the system. And while her plan has bold suggestions on how to reform higher education, the compact has significant ramifications for taxpayers, leaving the American public to shoulder hefty increases to pay for her proposals.
The New College Compact
The New College Compact has the following core components:
- Removing Cost As Barrier: Under the compact, students would not need to take out debt to attend a four-year public university. The federal government and the states would instead carry the majority of the cost. While the cost of tuition will be covered, Clinton acknowledges that living expenses can be costly, and so Pell Grants would be able to be used to pay for room and board.
- Community College Will Be Free: Community colleges will be completely free and programs put into place to help credits transfer.
- Offering Student Loan Refinancing: For those already with loans, Clinton’s plan would allow them to refinance their loans, even if they are with the federal government. Income-repayment plan restrictions will also be decreased so that you’ll never pay more than 10 percent of your income.
- Applying Pressure on Universities: Colleges and universities, including private schools, will bear more of a burden. They will be held accountable if students accrue student loan debt but are unable to get a good job.
What’s the Catch?
Free education, no student loan debt…it all sounds great on paper. Why isn’t everyone on board? Because Clinton’s plan would cost $350 billion over ten years. And if she expands it as she says she ultimately will, that will add an additional $100 billion. With our federal government debt teetering over $19.3 trillion, that means taxpayers will have to carry this huge cost.
One of the other problems is that Clinton’s plan is dependent on a means test. To get free education, families have to make less than $125,000. And while that’s a good income, $125,000 is a lot less in New York City than it is in Augusta, Georgia. That means some families will continue to carry a heavy burden, and other families who could afford college won’t have to, leaving taxpayers to foot the bill for people who could afford college on their own.
In addition to the tax increase on all taxpayers, Clinton would also pay for her compact by limiting itemized deductions wealthy individuals could claim on their taxes, adding another significant burden to small business owners and entrepreneurs.
Additionally, by lowering the interest rates on federal loans so that the government no longer reaps any profit, taxes will need to be raised to compensate for money lost to pay for other public works and services. Federal loans still require significant staffing and oversight, which needs a lot of money to keep running smoothly.
And for states to receive any of the billions of dollars associated with the New College Compact, they’d have to agree to increase their higher-education budgets, spending more money on colleges. This gives the federal government unprecedented influence on higher education and state budgets, leaving taxpayers with more of a burden on their state income taxes to compensate for these hikes.
With the cost of a degree being reduced to nothing, the workforce is going to change. Jobs that really don’t need a degree will suddenly require them. School class sizes will explode. Instead of a manageable class of 30 students in a public college, teachers will have to face classes with hundreds, while also facing lower salaries due to increased scrutiny on college spending.
The idea of debt-free education and free college is sexy and appealing. No one wants to be burdened with student loans for a decade or more. But the cost of zero-debt college is a lot more complex and far more expensive than taxpayers can bear. The hundreds of billions of dollars needed for this program to work would place a significant cost burden on taxpayers, increasing what they owe and taking money out of the pockets of working Americans. If implemented, Clinton’s New College Impact will have a severe and detrimental impact on the public and the economy.