Democratic presidential candidate Hillary Clinton recently revised her plan for higher education, promising to eliminate tuition for in-state students who attend public colleges and universities, as well as for students at community colleges. The plan also includes provisions to assist borrowers with repaying their student loans. University of Illinois education professor Jennifer Delaney, an expert on higher education finance, spoke with News Bureau education editor Sharita Forrest about the potential impact of Clinton’s plan on college-going students and their families.
Would Clinton’s plan eliminate college tuition for everyone in the U.S.?
Clinton’s plan is looking to move the balance between user fees – what students pay – and what the government is paying for certain types of students, especially those from low- and middle-income backgrounds.
In her proposal, in-state students from families that earn less than $85,000 per year – and up to $125,000 per year by the program’s fourth year – could attend a public four-year institution or a community college tuition free.
This proposal would not eliminate tuition for all students. Students above the income threshold and those who attend private institutions or out-of-state colleges would still pay tuition.
Wouldn’t it mean changing our cultural mindset about paying one’s way through college or “earning” college degrees if we subsidize almost everyone’s college education?
In the U.S., we have historically had user fees – aka tuition – perhaps reflecting the notion that students directly benefit from the education they receive. Even with U.S. colleges’ high tuition rates, all students receive subsidies – sometimes substantial subsidies. Nonprofit colleges often charge less than what it costs them to educate each student.
At public institutions, a good portion of the subsidy comes from the state. The tuition charged to resident students is lower than that for nonresidents, who don’t pay taxes in the states they attend college – and whose colleges don’t get the state subsidy for them.
What provisions are there in Clinton’s plan for states or colleges to hold down tuition rates?
By setting up matching federal funds, she’s providing incentives for states to increase their investment – or at least hold the line steady – on postsecondary appropriations. Because states would be required to put up their own money in order to meet the federal match, there’s every incentive for states to not have runaway college costs.
There’s great variation across the states, sometimes even within states, as to how tuition rates are set. Some state legislatures directly set tuition levels, but in Illinois, institutional boards set tuition rates. So, different states would need to use different approaches.
Clinton’s plan calls for a three-month moratorium on student loan payments. Will that benefit borrowers over the long term?
The three-month timeout on student loan payments is intended to give borrowers time to consolidate their loans, sign up for an alternative repayment plan or start rehabilitating their loans if they are delinquent or in default.
The plan is not specific on whether the loans would continue to accumulate interest during the three-month break. If the loans will still accrue interest, borrowers could end up owing more.
Most of the help borrowers would receive during Clinton’s moratorium are steps they can already take, such as consolidating their loans, changing repayment plans or rehabilitating their loans.
However, if related elements of Clinton’s plan were put into place during the moratorium – such as expanding income-based repayment options, allowing borrowers to refinance or expanding loan forgiveness programs – some borrowers would be better able to cope with their debt.
Also, focusing national attention on student loans may encourage borrowers to take the steps that will help them manage their debt.
State funding for higher education has declined significantly in recent years, leading to higher tuition rates. Would Clinton’s plan help stem that decline?
That seems to be her intent. She’s trying to deal with state disinvestment in higher education by providing matching federal funds. Historically, most federal matching plans have worked very well. We can actually trace back many of the state need-based grant aid programs to federal matching programs.
We have a history of states responding well to matching, as with the federal stimulus packages a few years ago. With the federal stimulus dollars coming in, states maintained their support of higher education institutions.
Recently, we have seen some states refusing federal matching money for political reasons. But that tends to be a difficult position to maintain when elected officials’ constituents would benefit from those federal dollars.