With 43 million Americans holding over $1.3 trillion in student loan debt, and defaults on the rise, the issue of education-related debt has become a central one in the 2016 presidential election. Both Hillary Clinton and Donald Trump frequently speak on the topic, though the candidates approaches could not be more different.
While both candidates have stated their positions on student loans, only Clinton has submitted a formal plan to address the issues surrounding education financing and debt. The proposal can be found on her web site.
Crux of Plan
Under the Clinton plan, students would have the option to attend any of the nation’s community colleges free of charge. Students whose families earn less than $125,000 per year would also be eligible for tuition-free enrollment at state schools.
The Trump plan calls for taking the federal government out of the business of education financing all together. Under the Trump plan, student loans would still be available from private banks, but the criteria for receiving one would be more stringent.
The Clinton plan calls for a three month moratorium on federal student loan payments, after which all loan holders would have the opportunity to refinance at a lower interest rate.
To date, the Trump campaign has not proposed measures to address issues faced by current holders of student loan debt.
New College Students
Under the Clinton plan, student loans will only be necessary for students who wish to attend private institutions or whose families earn more than $125,000 per year. (Initially, the upper income limit will be $85,000; the limit will increase by $10,000 each year until 2021.)
Prospective college students wishing to take out student loans will face increased scrutiny under the Trump plan. A borrower’s overall prospects for success in the job market, measured largely by which major he or she decides to pursue, will play a central role in determining who has access to student loans.
Role of Colleges
Each candidate has called for greater accountability of educational institutions.
According to Clinton’s web site, “colleges and universities will be accountable for reining in costs to provide value to their students; improving completion rates and learning outcomes; and doing more to provide students from disadvantaged backgrounds with the tools they need to reach college and succeed once they get there.” The proposal doesn’t go into specifics.
To make student lending attractive to private banks, the Trump campaign plans to address current rates of default. To do so, the campaign argues that colleges need to have “more skin in the game”. That is, colleges will share in the risk of lending to students. In practice, this likely means that they will choose to admit only students with high prospects of success as determined by a universal ranking system. Like Clinton’s, the Trump plan does not go into detail about how colleges and universities will be impacted by the proposed reforms.
Like most political issues, the criticisms of each plan are wide-ranging. However, there are a few worth noting here.
In order to provide free tuition at state-run schools, the Clinton plan will need the support of the individual states, which critics argue will be hard to obtain. (Notably, this was a criticism Clinton levied at the Sander’s campaign when it proposed a similar measure.) Additionally, others argue that by using income as the sole qualifier, the Clinton plan will subsidize the cost of college for many families who can already afford it, which weakens the overall system.
Given his campaign’s proposal to qualify students for education loans, an assessment that will rely heavily on college major, critics argue that Trump’s plan will prevent low-income students from pursuing degrees in the arts and humanities. Additionally, critics argue that privatizing the system of student lending is a step backward, and one that will result in many of the problems that were apparent before the federal government took control more than a decade ago.