Hillary Clinton’s Smorgasbord Approach to Student Loans

The candidate’s plan offers up popular items from the menus of other politicians, but its most novel element may prove more controversial.

John Locher / AP

Hillary Clinton excels at devising policies tailored to appeal to wide swaths of the electorate, and her latest major proposal—reforming higher-education financing—is no exception. The plan is largely stitched together from other recent efforts to address the daunting $1.2 trillion owed by Americans with student loans, incorporating popular ideas from both sides of the aisle.

The New College Compact, her campaign estimates, would cost the federal government $350 billion over 10 years. It aims to make public colleges debt-free for students, to cut interest rates for people struggling with debt from loans taken out to pay for college, and to expand some existing aid programs to cover more people.

Senator Elizabeth Warren introduced legislation last summer that would have allowed borrowers to refinance their loans at current rates. Her proposal was blocked by Senate Republicans because it relied on hiking taxes on millionaires. She and others argued that it made little sense that Americans can refinance almost any other type of loan, but not student loans. Clinton’s plan includes much of Warren’s refinancing proposal, but relies instead on capping tax deductions.

Warren’s plan was dismissed by many conservatives, including Lamar Alexander, who chairs the Senate’s education committee, as a political stunt. Alexander, though, was simultaneously pushing an alternative proposal, which focused on procedural reforms. His plan would have streamlined the application, helped families understand the loan process, and decreased the bewildering array of options for repaying student loans. Clinton’s plan pursues much the same set of goals.

Other items on the long list bundled into Clinton’s proposal include allowing low-income students to use federal Pell grants on living expenses, making sure students complete their degrees, and making two-year community colleges free—which President Obama proposed earlier this year. It also incorporates a version of Connecticut Senator Richard Blumenthal’s plan to help those duped by for-profit colleges reset their student loans, and to tighten the regulation of such institutions.

In addition to cobbling together elements of prior proposals, Clinton’s compact does, in fact, include some relatively novel ideas. It would expand the AmeriCorps volunteer program (started under her husband) from 75,000 to 250,000 participants, enlarge a program that aids veterans pursuing degrees, and allow nontraditional students seeking to advance or shift their careers to draw upon federal aid.

Bernie Sanders’s proposal for “free tuition” might sound more ambitious than Clinton’s “debt-free tuition,” but it doesn’t sound more viable. And Clinton offers enough to avoid alienating liberals who advocate moving toward the models of completely free college utilized by many European countries. On the right side of the aisle, she’ll have an easier time pointing to aspects of the plan that emphasize accountability and innovation—goals already being emphasized by GOP leaders. Either way, her campaign has put together a plan tailored to appeal to a variety of audiences, and designed not just for the campaign trail, but also for a legislative push.

Ironically, however, the breadth of the plan might ultimately prove its undoing. If Clinton were ever to succeed in bargaining for the bipartisan support necessary to pass Congress, a massive, federally led overhaul would reignite tensions by seeking to force regulations onto state and local entities.

After the Affordable Care Act was passed, lawmakers and governors of some states resisted implementing Obamacare—largely by choosing not to set up their own exchanges and by refusing to accept Medicaid expansion. Such resistance had a large price tag for many of those states: A Gallup survey released Monday shows that states that chose to fight Obamacare have much lower rates of insurance coverage than those that accepted it.

In order to receive the billions in federal dollars promised by the New College Compact, states would effectively be required to agree to stop cutting their own higher-education budgets, to gradually increase spending on colleges, and to ensure that no students will have to take out any loans to pay for school. It is easy to imagine conservative state and local officials rejecting this as a gross expansion of the federal government’s power. “Students, taxpayers and voters should react with great skepticism to any proposals that would amount to a Washington takeover of higher education and jeopardize the autonomy and independence that has made our higher education system the best in the world,” a Republican congressional aide already told Politico.

The effects of any resistance would be felt by schools and students in states that choose to fight back. If it follows the same pattern as Obamacare, this would leave states that are already underperforming on higher education with less to spend, even as it rewards many of those that are already excelling. But still, that fight is years out—should a version of Clinton’s plan even manage to make it through Congress.