Hillary’s Debt Bomb
Clinton recycles failed higher-education policy
MILLENNIALS are used to empty promises from policymakers seeking our support for their proposals. Unfortunately for millions of us facing higher college tuitions and mounting student debt, Hillary Rodham Clinton is now taking that path, too.
Clinton last week unveiled her “New College Compact,” a sweeping $350 billion plan to provide “debtfree” education from public colleges and universities. A spokesperson billed it as a “bold transformation of how we would do higher education financing in our country.” In reality, it’s anything but bold. In fact, we’ve seen this all before — it’s just another expansion of the education status quo.
Clinton wants to raise taxes to pay for more federal grants. She wants to add to our national debt by increasing and expanding loanforgiveness and incomebased repayment programs. And she wants to enable more studentdebt refinancing — which will save borrowers all of $17 per month over a standard 10year repayment plan.
For decades, we’ve been told such governmentdriven solutions would be the cure for our highereducation ills. And the results? It’s only led to higher college tuition and more student debt.
As each of these programs has expanded over the years, so too have our problems. Since 1995, tuition at fouryear public universities has more than doubled. Meanwhile, student debt has more than tripled over the last 10 years — from $363 billion in 2005 to $1.3 trillion today. Not even creditcard debt reaches as high.
But the government’s growing role in higher education hasn’t just correlated with rising tuitions — it’s causing it. A July report from the Federal Reserve Bank of New York demonstrated that each additional dollar in federal financial aid caused a 65cent hike in tuition.
In this way, Clinton’s plan to spend another $350 billion on the same policies is like trying to cure your chicken pox by scratching with a corrugated knife — it may feel good at first, but will only make your situation worse. Students end up paying for it either way, whether through higher tuition costs or higher taxes later in life to pay off the massive new government entitlement.
Instead, we should encourage policymakers to focus on studentcentered reforms that provide more choice in education, reduce costs and increase access to higherpaying jobs, all while reducing debt when we graduate.
What does this look like in practice?
One option is competencybased reforms that award degrees based on merit, rather than how long students sit in a classroom. Students should be able to “test out” of classes and graduate in two or three years and thus pay for fewer total course hours. This alone would save families tens of thousands of dollars and reduce total student debt.
Another is increasing access to highquality alternatives to traditional fouryear schools. One example is the thriving onlineeducation sector. With goatyourownpace scheduling, the flexibil ity of these programs is critical to lowerincome students working through school. This is the type of innovation made possible in the 21stcentury economy. We should ensure that it’s fully utilized — and that no barriers stand in the way.
Yet another option is to reform the collegeaccreditation process. These are the standards deciding which educational institutions qualify for financial aid. Under current law, colleges and universities that already qualify are charged with creating these guidelines.
By writing the rules, they have an incentive to effectively lock out competition from twoyear advanced training and apprenticeship programs that fasttrack students for highpaying jobs in the medical, manufacturing and energy sectors. Legislation like the Higher Education Reform and Opportunity Act currently before Congress would resolve this conflict of interest by allowing all 50 states to create their own accreditation standards.
To be sure, no single one of these reforms is a silver bullet that will immediately solve the highereducation problem.
Rather, they’re pieces of a larger puzzle that together can bend the longterm education cost curve down. That stands in stark contrast with Clinton’s stale proposal to spend another $350 billion, which will only lead to higher tuition and more debt. Millennials should take note — and not be fooled.