Hillary Clinton’s poll numbers have suffered lately, particularly on the question of her honesty and integrity. This won’t make it easy for her to excite the younger voters who boosted Barack Obama’s candidacy in 2008 — the very ones most likely to spot and reject an obvious phony.
And so what better way to win back their hearts than to appeal to a pocketbook issue they can relate to?
Hence Clinton’s speech on Monday, outlining a new $350 billion plan to eliminate college indebtedness for students at public institutions of higher education across the United States. The plan is a nice play for young votes, but as a policy, it comes with some important caveats. One is that it threatens to damage American philanthropy.
Clinton’s plan may sound unrelated to philanthropy, but it actually depends on charities for its funding — including the private schools that will not benefit. It is paid for with a tax increase — not an increase in tax rates, but new limits on deductions by high-income earners. These are the very taxpayers who tend to make the philanthropic world go round with large charitable donations. As it is, they are encouraged to give more by a tax code that lets them take dollar-for-dollar deductions.
And so this plan squeezes not the wealthy — who can recoup some or all of the tax losses by simply scaling back their donations — but the civil society organizations they support. It means billions less for all of the nation’s homeless shelters, food banks, tutoring programs, health clinics, churches and other non-profits that can accept tax-deductible donations — and that includes universities and scholarship funds.
On the other side of the ledger, Clinton’s plan would benefit roughly 7 million college borrowers in any given year who attend public colleges and universities. By draining charitable organizations, Clinton would help 35 percent of the U.S. college student population avoid the $25,000 debt they now incur on average when they leave school, or the modest $14,300 carried by the average student who graduates successfully.
The program would be open to any state that agrees to provide a loan-free education. But the federal money comes with new strings attached — participating public universities would have to spend a certain amount of their budget on instruction. Universities are not known for their frugality — their administrators often celebrate the obscene levels to which they can raise tuition by going on construction binges. And so such a limitation is not bad in principle, and perhaps states should consider imposing it themselves.
But why should an already-overburdened federal government be expanding its role even further into micromanaging how universities operate? Consider all of the damage it has done so far. One of Uncle Sam’s earlier efforts to make college affordable was the current federal student loan program. The widespread availability of cheap money for college has in fact had the opposite effect, allowing colleges to raise tuition far faster than inflation, economic growth, or even the cost of health care, according to a recent study by the Federal Reserve Bank of New York.
There is no question that major reforms are needed in academia, and especially in academic financing. Student indebtedness has become not just excessive but ridiculous. Even so, a federal bailout of the nation’s state schools does nothing to lower the cost of education, and the proposed modest reduction in student debt cannot possibly justify even the slightest damage to America’s charities.
