Essentially, she has cobbled together a host of small-ball ideas and plans to spend $350 billion over the next ten years, using most of the money to encourage state governments to offer more affordable college options. And she also wants to lower student-loan interest rates and expand long-term repayment programs. Don't worry, Harvard and University of Phoenix. You'll still get your cut.
All the leading presidential candidates know that young people are worried about college costs and student loans, and they've all proposed plans that will supposedly help relieve the financial burden on college students.
But no plan is worth anything unless it addresses the suffering that students and former students are experiencing right now. A good reform plan must contain these elements:
- Kick the for-profit colleges out of the federal student loan program.
- Amend the Bankruptcy Code to allow distressed student-loan debtors who acted in good faith to discharge their loans in bankruptcy.
- Abolish unconscionable fees and penalties on student-loan debt.
- Stop garnishing Social Security checks of elderly people who defaulted on their student loans.
- Stop pushing borrowers into 20- and 25-year repayment plans.
- Stop lending money to allow people to enroll in overpriced postsecondary programs that will never pay off---law programs at third-rate schools, overpriced MBA programs, overpriced liberal arts degrees, overpriced online programs, etc.
Bernie Sanders, on the other hand, has proposed a simple plan that will address at least some of the issues I identified. He basically proposes to offer everyone a free four-year college education at a public college. Vassar College president Catherine Hill said in a New York Times essay that she opposes this idea, which she says will cost about $30 billion a year.
But that's cheaper than Hillary's plan.
And here's the beauty of Bernie's scheme. If everyone could go to college free, no one would enroll at a for-profit college; and these sleazy institutions would have to close their doors. That's a big plus.
Moreover, private colleges like Vassar would probably have to lower their tuition. Few people would borrow a quarter of a million dollars to go to a fancy private school if they could enroll in a good state university and pay nothing. No wonder Vassar's president opposes the idea.
And if college is free, people won't be borrowing money to go to college. They won't run the risk of default, of paying huge default penalties, or of being driven into 25-year repayment plans.
So what's not to like? Especially when you consider that the government is spending $165 billion a year right now on the federal student loan program, which is nothing but a train wreck. Bernie's idea may seem hare-brained, but it is actually the only proposal put forward by any of the presidential candidates that makes sense.
Bernie's plan won't solve the student-loan crisis completely. About 40 percent of student-loan money is going for graduate education. We've got to get tuition costs down at the law schools, the business schools, and all the professional schools. We've got to quit turning out too many lawyers, veterinarians, and MBAs. And we've got to forgive the student-loan debt that has buried millions of people.
But Bernie's plan is a start. It will at least deal with the student-loan crisis at the undergraduate level.
Mitchell D. Weiss. What's Missing From Clinton Student Loan Plan. USA Today, August 15, 2015. http://www.usatoday.com/story/money/personalfinance/2015/08/15/credit-dotcom-hillary-clinton-student-loan-plan/31456547/