Clinton Campaign Releases New College Compact

By Joan Berkes, Policy & Federal Relations Staff

Hillary Clinton’s presidential campaign yesterday briefed the Higher Education Community on the former Senator and Secretary of State’s plans to diminish debt burden for students and increase graduation rates. Clinton’s New College Compact promises free tuition at community colleges and debt-free tuition, fees, and books at 4-year public colleges. Families would be expected to make “reasonable” contributions, and students would be asked to contribute earnings from employment based on 10 hours of work per week.

The plan addresses issues of recent scrutiny, such as cuts in state funding for higher education, accountability measures for institutions of higher education, questionable practices of servicers and lenders, and innovative teaching. A number of the plan’s proposals surround loan debt, and would provide refinance options (including for private education loans), lower interest rates, and simplified income-based repayment open to all borrowers.

The cost of the plan—$350 billion over 10 years—would be paid for by changes to benefits for high-income taxpayers. The plan would cut interest rates by limiting the profit that the government could make on undergraduate student loans. Risk-sharing by institutions would also play a role in funding innovative learning models, including shorter specialized coursework, and rewarding college completion. Clinton’s materials call for strengthening the gainful employment rules and embrace the risk-sharing principles of the Student Protection and Success Act introduced last week by Senators Hatch and Shaheen.

The plan would offer a single income-based repayment program for all federal student loan borrowers, which would cap repayments at 10 percent of income and forgive balances after 20 years (rather than the current 25 years). Borrowers could opt for direct deduction from paychecks to streamline the repayment process. The plan would focus extra efforts on delinquent borrowers, and offer new rehabilitation and repayment options to defaulted borrowers.

“Too little has been done to address the lack of accountability for colleges and universities that do not deliver on the promise of a degree,” Clinton writes. Her plan would look into fraudulent practices and deceptive marketing by certain schools, help defrauded students cancel debt, and restore defrauded veterans’ GI Bill benefits. It would also grant a private right of action by borrowers against lenders and servicers.

The plan would offer incentives for improvement. States and schools would be eligible for grant payments based on a commitment that no student should borrow for tuition at 4-year public colleges (even without taking into account Pell Grants), and that other costs should see improved affordability. Emphasis is placed on enrolling low- and middle-income students. States would ensure that all funds received by their institutions are applied to instruction and learning, and improving the prospects for completion.

The plan would also help modest-endowment private colleges that serve a high percentage of Pell Grant recipients lower the cost of attendance and implement supports to improve outcomes for students.

Clinton’s plan would also expand AmeriCorps, extend the American Opportunity Tax Credit (AOTC), and build on initiatives like TRIO and GEAR UP to improve student support services, including child care. It calls for simplifying the FAFSA and providing early Pell notification.


Publication Date: 8/11/2015

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