Student Debt Matters to All of Us

A college degree is arguably the best investment a young person can make in his or her economic future.  A university education is associated with higher lifetime earnings, and lower risk of unemployment. But beyond the individual benefits, society has an interest in an educated citizenry.  Beyond the goal of having an educated workforce, if we want our democracy to thrive in the 21st century, we need individuals with critical thinking skills, intellectual curiosity, an ability to consider options and trade-offs, and to plan for our collective future.  For political as well as economic reasons, we want a broadly and highly educated populace.

But today, students are relying heavily on student loans to pay for the ever increasing costs of a college education.  The class of 2015 has accumulated approximately $56 billion in student loan debt and, the average student is saddled with more than $35,000 of debt. Fifty seven percent of people with student loans are worried about their ability to repay them, and research has shown student debt  negatively effects a person’s ability to accumulate wealth and buy a home.  Moreover, at $1.2 trillion, total student loan debt is almost double credit card debt in the U.S.

As the primary lender in the student loan system, the federal government has a special interest in policy solutions that ensure students can pay back their student loans.  And as the entity charged with stabilizing and growing the national economy, the federal government has a stake in reducing the debt burden on working people.   

What’s the Solution?

A college education is fast becoming the great equalizer in the United States. Access to education has been an ongoing struggle in this country and one of America’s core democracy tenants is that an education can take anyone from the depths of poverty to a life of prosperity and achievement. 

Ahead of the 2016 presidential election, candidates of both parties have proposed solutions to increase college affordability, reduce the burden of high interest rates on graduates, and ensure that future students will not be discouraged from pursuing a college education because of its price tag. These proposals vary widely, as the chart below shows, so we have assembled this guide to comparing candidates’ proposals.


Approach to Affordability:

Debt Solutions:

Hillary Clinton

  • Make community colleges tuition-free

  • Provide grants to 4-year public colleges and universities that promise to eliminate the need for students to borrow to attend, if students contribute wages from 10-hours of work per week

  • Hold colleges and universities accountable using info on outcomes including graduation rates and administrative costs

  • Allow students to refinance current loans at current rates

  • Lower interest rates for future students to the government’s low cost of debt

  • Enable all borrowers to enroll in a simplified income-based repayment plans, limiting debt payments to 10 percent of income

   Financing the Change:

  • Limiting certain tax expenditures for the wealthy will pay for the 10-year $350 billion plan.

For more information on the “New College Compact” Plan, click here.

Bernie Sanders

  • Make all 4-year public colleges and universities tuition-free

  • Provide money to states based on their commitment to protecting students, ensuring students receive a quality education, and curbing cost increases

  • Expand work study opportunities

* The plan also calls for colleges and universities to become less dependent on low-paid adjunct faculty.

  • Allow students to refinance current loans at current rates

  • Lower student loan interest rates by reverting to the formula used pre-2006—lowering the rate from 4.32 percent to 2.32 percent

  • Bars student interest rates from ever again rising above 8.25 percent

   Financing the Change:

  • Imposing a Wall Street tax on investments would more than pay for the annual $47 billion federal contribution to the plan

  • States would absorb one-third of the costs

For more information on the “College for All Act” introduced by Senator Sanders, click here.

Martin O’Malley

  • Freeze tuition rates and public colleges and universities

  • Reduce tuition to 10 percent of the state’s median income for 4-year public universities and 5 percent of median income at two-year public colleges

  • Increase state funding for higher education using state matching grants that hold states accountable using info on outcomes including graduation rates and administrative costs

  • Expand work study opportunities

  • Allow students to refinance current loans at current rates

  • Enable all borrowers to enroll in an income-based repayment plan with loan forgiveness options

   Financing the Change:

  • Not specified.

For more information on Governor O’Malley’s plan, click here.

Marco Rubio

  • Better inform students about how much they should expect to make after graduation given their course of study
  • Reform the “accreditation“ process, so more online  course-providers and newer programs are given more consideration
  • Enable all borrowers to enroll in an income-based repayment plan
  • Allow student to turn to private investors to develop income-based repayment plans

   Financing the Change:

  • Not specified.

For more information on Senator Rubio’s plan, click here.


Additional Information on Other Candidates’ Higher Education Proposals:

  • Lincoln Chafee
  • Chris Christie
    • Supports private income-share agreements, whereby students would approach private investors for help paying for tuition in exchange for a percentage of their income for a number of years
  • John Kasich 
    • Capped and froze tuition rates at Ohio state universities              
    • Made funding for public colleges and universities more closely dependent on graduation rates and performance measures
    • Expanded access to college-level courses for high school students
  • Rick Perry
    • Pushed a four year tuition freeze for freshman in Texas
    • Supported tying state funding to graduation rates and performance measures at public universities and colleges
  • Donald Trump
    • Started his own for-profit college, choosing not to seek accreditation, suggesting he may be sympathetic to reducing regulations on for-profit colleges
  • Scott Walker
    • Has supported capping and freezing tuition rates at Wisconsin state universities               
    • Has called for a 13 percent cut in state support for Wisconsin public universities that could raise tuition for students

The 2016 election will be fought on whether we want rules and policies that expand opportunity for all Americans or if we are going to continue to allow wealth and opportunity to accumulate for the lucky few at the top of our income distribution.  Access to an affordable college education will be a key part of those debates.  Let’s hope the candidates who emerge at the end of this long process have clearly articulated plans for making higher education attainable and affordable for all Americans.  


NOTE: While the positions of all candidates declared at the time of this post were examined, only those with developed plans describing how to reduce student debt, lower costs, and/or increase the accessibility of higher education were included.

For Future Reading:

Paving Our Roads with Broken Promises: A Rotten IdeaThe Fine Print, 7/23/2015

Progressives Present Alternative Budget: A Raise for AmericaThe Fine Print, 3/19/2015

Investing in Our Future: President’s Proposal Promises Free Community College TuitionThe Fine Print, 1/12/2015

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We have to decide as a nation whether the taxpayer ought to pay more so that other people can go to college. Even if we were to accept the findings of the study cited here, which I do not think offer data that's "hard" enough to base a decision on, I don't think hindering your neighbor's wealth accumulation or house buying is a good argument to increase the taxpayers' cost. IMO our policy ought to encourage people to carefully consider the options, the impact on them personally and the sacrifice they''ll have to make. You should have to weigh the pros and cons, including how am I going to pay for it, what are my options, what work can I do early and often to facilitate the process. And, while I'm in school, I'd better take it very seriously and get the most value because there's significant cost involved -- for me. Minimize the social and party time. I don't think we have to conclude that you either go to college or you earn hundreds of thousands of dollars less. In fact some "drop outs" have made large fortunes. Anyway, some heros at the Office of Management and Budget in the late 1980s got the budget scoring rules changed so that the full cost of student and other federal loans shows up in the budget process early, unlike federal insurance. So now we at least can have a discussion of the costs at decision-making time. My personal preference is nearly free community colleges and debt counseling. Maybe that's John Kasich lite.
I council dozens of student and parent borrowers on a daily bases and I feel the biggest contributor to student loan default is the lack of or inconsistencies of pre-loan education and information. I feel education loans are affordable and the current programs in place will accomadate any borrower regardless of their current financial situation. I would like to suggest a few things that need to be addressed or put in place and why. 1. Pre-loan education Most borrowers are not finance literate. They don't have a clear understanding of the master promissary note whether they bothered to read it or not. For most this is the first loan they would take out. Many do not understand the impact of negative credit reporting. A simple solution would be a 2-3 day mandatory seminar to quality for Federal Student Aide. 2. Eliminate all 3rd party student loan
Sorry... It is not easy completing a comment on a mobile device. 2. Eliminate all 3rd party "servicers". These companies prey on borrowers already financially disadvantaged and charge exorbitant. prices and fail to disclose the reality that the same services are free from their DOE assigned servicer. They muddy the waters with false and misleading advertisements. Many continously commit fraud and break federal regulations. 3. Review borrowing limits to ensure student are not over borrow. I have heard too many times that borrowers wished they wouldn't have maxed out as a lot of the money went to financing comfort and parties. 4. Tighten regulations on school acceptance, especially on-line schools. What are the stats of on line students either in repayment or default without a degree? I believe this number is high. 35,000 debt is manageable for even low wage jobs. There has to be sacrific to succeed and we need to convey that to our youth. The attitude I hear everyday is that every other bill or expence they have is more important than paying their student loan debt. Where is that coming from... I assume it is from these last few generation's sense of entitlement . They have yet to contribute, hence they are entitled to nothing.
great story
well said