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Clinton unveils plan for no-loan college tuition

Presidential candidate calls for federal grants to cut tuition and refinancing of current student loans

Democratic presidential candidate Hillary Clinton unveiled a plan on Monday to address the burden of student debt and make higher education more affordable, largely through federal incentives to make so-called no-loan tuition available at public colleges.

Speaking at a town hall meeting in Exeter, New Hampshire, she said her proposal would cost an estimated $350 billion over 10 years. The plan calls on the federal government to give grants to states based on guarantees that they would offer students no-loan tuition — meaning tuition rates low enough that students don’t have to borrow money — at four-year public colleges and free tuition at community colleges. The size of the grants would be linked to how many low- and middle-income students are enrolled.

“Higher education should be a right, not a privilege for those who can afford it,” she told the crowd.

The lower tuition rates at public colleges and universities would allow students who rely on federal aid to use a portion of it to cover their living expenses, Clinton said. Families would still be expected make what she termed a “realistic” contribution to tuition, and students would be required to work 10 hours a week in return for not having to take out loans.

Under her plan, private universities with modest endowments that serve a higher percentage of low-income students would receive federal funds to help lower the costs of attendance and improve graduation rates.

Dubbed the New College Compact, the plan also proposes refinancing at lower interests rates for those currently repaying student loans — an idea previously floated by Sen. Elizabeth Warren, D-Mass. Clinton’s aides say the change would save an average of $2,000 for 25 million borrowers.

Clinton would expand income-based repayment programs, allowing student borrowers to enroll in plans that would cap their payments at 10 percent of their income, with remaining debt forgiven after 20 years.

The cost of the entire proposal, she said, would be covered by closing tax loopholes for the wealthiest Americans.

U.S. student loan debt tripled in the last decade, to $1.2 billion in 2015, according to the Federal Reserve Bank of New York (PDF). Students who earned bachelor’s degrees during the 2012–13 school year borrowed an average of $27,300, a 20 percent increase in the last 10 years, according to the College Board.

Though Clinton’s plan does not go as far as those of other presidential candidates, such as Sen. Bernie Sanders, D-Vt., who has proposed tuition-free public colleges and universities, progressive activists praised the former secretary of state.

“It’s an ambitious proposal that demonstrates the Clinton campaign has been listening to grass-roots Democrats’ calls for big, bold ideas to address our growing income inequality crisis,” Charles Chamberlain, the executive director of the political action committee Democracy for America, said in a statement.

Still, the presidential hopeful wasn’t without her critics.

Matthew Chingos, a senior fellow at the Urban Institute, a Washington-based think tank, said that the idea of forming partnerships between the federal government and the states to reduce college tuition has already been floated by other Democratic presidential candidates such as former Maryland Gov. Martin O’Malley. But, he added, Clinton’s proposal of funding such a partnership by closing tax loopholes for the wealthy is “obviously dead on arrival in a Republican Congress.”

He called her idea of students refinancing their loans down to existing rates a “gimmick,” since it would help the wealthiest students, who take on a disproportionate amount of educational debt. “It would be expensive, and it would be very regressive,” he said. “Basically, it’s just a handout to doctors and lawyers who have big loans but don’t have any problem paying off their debt.”

Sara Goldrick-Rab, a professor of educational policy studies at the University of Wisconsin at Madison, said that tackling student debt isn’t the biggest problem. Instead, she said, the enormous cost of college needs to be addressed, since it often frightens away talented students. She cited steep dropout rates among lower-income students who work long hours to cover their costs, only to quit after a year or two, leaving them saddled with debt and without a degree.

“Those are the people who are defaulting on their loans at such high rates,” she said. “I think that where we need to start is in making the associate’s degree free.” That way, she said, students can try college for free and then borrow if they decide they want to earn a bachelor’s degree.

That aligns with President Barack Obama’s $60 billion plan floated in January to offer free community college to students who earn a certain grade-point average. But that plan hasn’t gotten much traction in Congress.

Conservative lawmakers on Monday criticized Clinton’s plan, with Republican presidential candidate Sen. Marco Rubio of Florida saying it amounted to pouring more money into an “outdated” system.

“We need a flexible system that allows people who have to work full time, like single mothers who are raising children … flexible ways to go back to school,” he said in a statement.

With The Associated Press

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