The first issue of Lena Dunham's newsletter Lenny, released Tuesday, features a sit-down with Democratic presidential candidate Hillary Clinton. The two bantered about 20-somethings and cutout dresses, but Dunham also honed in on a policy issue important to young voters: student debt. Dunham asked Clinton what can be done about college debt, which "follows so many people through their lives and makes it impossible for them to take career risks that they might have hoped for." Clinton's answer focused on what current graduates can expect, but her full plan goes even further.
In the interview, Clinton focused on two problems: interest rates and the length of time it takes the current graduate to pay off their loans. She said that both problems stifle plans to get married, start a business or even move out of one's parents' house.
So we are not only squashing their hopes and dreams, we’re hurting the economy. Because that money should be used for other things besides paying the government to try to retire your debt. This is one of my highest priorities. I’m talking about it everywhere, and I think it would make a big difference for a lot of the 40 million people who have student debt.
In addition to helping those of 40 million of us currently paying back student loans (*raises hand*), Clinton's "College Compact" would help make education affordable for kids heading off to college. In what The Atlantic called a "Smorgasbord Approach to Student Loans," Clinton would spend $350 billion to bring down costs for graduates and future students alike. The plan includes elements of many different proposals (hence the smorgasbord). It's not as simple as making all post-secondary schooling free, but it would try to limit costs in the cases of future students as well as current loan holders.
Future Students At State Schools
Under Clinton's plan, community college would be free for everybody. And four-year state institutions would be offered grants to ensure that students graduate without taking out loans. Pell Grants — money given to the poorest college-bound students — wouldn't be figured in to the plan, allowing the grants to be used for living expenses, too. Students would also be expected to work 10 hours a week, and families would be expected to make a realistic contribution.
Future Students At Private Universities
Some private universities would also receive money in the plan to reduce tuition. Colleges with smaller endowments could access a fund to help them enroll and educate first-generation college students and minorities. For students who choose to take out loans to pay for private universities, interest rates would be cut nearly in half. Universities would also have to help foot the bill on defaulted loans, encouraging schools to help students graduate and find jobs.
More On The Indebted
The Clinton campaign estimates that about 25 million Americans could benefit from refinancing at current interest rates. First off, borrowers would consolidate all their loans into one with simple rules: No one would ever need to pay more than 10 percent of their income, and college debt would be forgiven in 20 years. That would simplify the multiple income-based (IBR, ICR, etc.) repayment plans into this program.
Another plus would allow borrowers to have their payments deducted directly from their paycheck — no more sending three payments to separate loan servicers, and no more accidental missed payments. For those who have already defaulted, new options to "rehabilitate" the loans would be introduced. This allows borrowers to make several on-time payments to bring their loan back to "current" — something creditors will want to see when you buy a house or car.
With these proposals, Clinton hopes to prevent more cases like in a story she told Dunham:
"Oftentimes in crowds, I will say, 'Who has student debt?' And so many hands go up. I’ll say, 'Does anybody have an interest rate of eight percent?' Hands stay up. 'How about over eight percent?' I had a woman in Iowa the other day, 12 percent she’s paying on her loans."
Should we forsee "Student Borrowers for Hillary" signs soon? This sort of plan is what the Clinton campaign hopes will resonate with younger voters, and it just might work.