Washington – As policymakers and presidential candidates think of ways to tackle America’s $1.2 trillion worth of student loan debt, much of the focus has been on decreasing tuition rates and making financial aid more plentiful and accessible.
Hillary Clinton unveiled her New College Compact on Monday, joining fellow Democratic presidential hopefuls Vermont Sen. Bernie Sanders and former Maryland Gov. Martin O’Malley, who had previously released their own higher education initiatives.
The three plans have similar elements, including emphasis on work-study programs, lowering student loan interest rates and encouraging states to maintain – and eventually increase – their higher education spending. However, the plans show differences in how the candidates plan to decrease or eliminate tuition costs, pay for non-tuition related expenses and finance the proposals.
Here’s how the plans stack up against one another:
Hillary Clinton
What: New College Compact
How much: $350 billion over 10 years
How: Paid for by closing tax loopholes and expenditures for high income taxpayers. Half the funds would go to “incentive grants” given to states that provide free community college and loan-free tuition at 4-year institutions. One-third would go to relief for those with interest on their student debt. The rest would go to spur innovations in higher education.
What it would do:
Tuition rates:
- Free community college tuition
- Students can attend in-state, 4-year universities without taking out tuition loans
Loans and Interest rates:
- Low interest rate loans
- Loan repayment rates can never rise about 10 percent of income
Work-study and financial aid:
- Pell grants can be used for living expenses
- Students work 10 hours a week in work-study programs
Other components:
- Families asked to make “affordable and realistic” contribution to tuition
- States cannot decrease higher education funding and must increase funding over time
- Expands American Opportunity Tax Credit
Bernie Sanders
What: College For All Act, introduced into the Senate in May
How much: $47 billion a year, given to the states. States are required to provide another $23 billion
How: Paid for by instituting tax on financial transactions, including stock trades, bonds and derivatives.
What it would do:
Tuition rates:
- Eliminates undergraduate tuition at 4-year, public institutions
Loans and interest rates:
- Allow refinancing of student loans based on current rates
- Lower student loan interest rates to 2.32 percent and cap interest rates at 8.25 percent
Work-study and financial aid:
- Expand work-study programs to more universities and more students
- Create pilot program to simplify student aid applications
Other components:
- Funding cannot be used for administrator salaries, non-academic buildings or merit-based financial aid
- To qualify for funding, states must maintain funding levels for higher education and need-based financial aid and reduce use of adjunct faculty – who are typically paid less than full-time faculty
Martin O’Malley
What: Making College Debt Free For All Americans
How much: O’Malley has not released the cost of his plan
How: O’Malley has not released details about how the plan would be financed. (O’Malley aides told the Washington Post it could be financed by closing corporate tax loopholes and taxing capital gains at the same rate as earned income.)
What it would do:
Tuition rates:
- Freeze public tuition rates
- Reduce tuition to reflect state median income
Loans and interest rates:
- Allow refinancing of student loans
- Enroll borrowers in income-based repayment plans
- Encourage state increases in higher education funding through matching grants
Work-study and financial aid:
- Increase the funding provided by Pell grants
- Expand work study to include more students
Other components:
- Create affordable, on-campus childcare
- Increase dual-credit programs for high school students
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