Hillary Clinton announced sweeping updates to her higher education plan this week in an effort to win over young voters and Bernie Sanders’ millennial supporters.
But, how will it work? And who’s going to pay for it?
Personal finance and education policy experts have weighed in, and they’re not all on board with the new plan.
Part of the plan is a three-month grace period for student debt-holders that Clinton said would give borrowers a chance to consolidate loans and sign up for income-based repayment plans.
But, borrowers can already do these things if they choose to take advantage of the options available to them.
“You can sign up for income-driven plans, consolidate loans or work toward a federal loan forgiveness plan without waiting for a moratorium,” according to Anna Helhoski and Teddy Nykiel at NerdWallet. “You also can secure your own student loan reprieve by requesting a deferment or forbearance.”
The Department of Education currently offers four different income-based repayment plans that borrowers can enroll in if they are unable to afford their monthly payments.
The problem is likely the fact that many people don’t know these plans exist. The Government Accountability Office has pointed out the large gap between the number of borrowers who are eligible to participate in Income-Based Repayment (51%) and those who actually enroll (13%).
Forbearance, or temporarily postponing payments or reducing the amount of payments, is also an option that is currently available, as is the option to consolidate loans.
Another major piece of her new plan is to make public colleges “free” for an estimated 80% of families who are below the income threshold of $125,000.
The conservative argument against this proposal is the same as it has always been — “free” college isn’t really free. The costs will be shifted to the states and the federal government and back to the taxpayers.
Neal McCluskey, director of the Cato Institute’s Center for Educational Freedom, argued that the income threshold Clinton has imposed would create “huge, counterproductive costs.”
“Taxpayers would end up subsidizing many well-to-do people while taking money from other uses they might have had for it, such as buying a car, purchasing a home or investing,” McCluskey told the Washington Post. “Meanwhile, it would likely exacerbate problems we already have, including needing degrees for jobs that didn’t previously require them and overcrowding schools.”
Even proponents of Clinton’s plan have pointed out the flaws.
Outspoken liberal professor Sara Goldrick-Rab said tying financial aid to income has “failed miserably” in determining which families need help paying for college, and a policy expert from the left-leaning think tank Education Trust pointed out that her plan fails to consider the varying cost of living in different areas of the country.
There is, of course, also the likelihood that some states will choose not to participate at all — a fact that Clinton herself used to attack Bernie Sanders for his “free” college proposal.
