I’m wading into politics, in honor of the upcoming nominating conventions!  The Democratic convention will be held July 25 – 28 in Philadelphia, and the Republican convention will be held July 18 – 21.  Whichever way you go, I thought it would be good to get the candidate’s plans and perspectives on how they intend to handle both rising college costs and current student loan debt holders.

Hillary Clinton – Presumptive Democratic Nominee

The details of Clinton’s plans are as taken from her website:

  1. Children from families making under $125,000 per year will be eligible for free in-state tuition, phased in over five years, but starting with kids whose families make under $85,000 per year.
  2. Three-month moratorium on student loan payments, to assist borrowers in default to get up to speed, to help the Department of Education get borrowers to refinance, consolidate, or make use of income-based repayment plans.
  3. Borrowers behind on payments will “have more options” to get out of default, including the possibility of refinancing to current rates.
  4. Restore Pell Grant funding for summer school.

The biggest red flag in the plan is how it will get paid for.  Most of the funding for colleges comes at the state level, so how the federal government is going to force states to spend more money on college education is left unresolved at this point.  There also appears to be some disagreement on how much the plan will cost US taxpayers.

Additionally, since many college students don’t graduate on time, and thus run up more costs, Clinton’s plan doesn’t necessarily address that issue.

I personally, given the percentage my student loans are sitting at, really love the refinancing idea – just putting my personal bias out there.

Finally, there seems to be a bit of a moral disagreement here, particularly for anyone in a higher tax bracket, and is an interesting question that I’ve never seen resolved to my satisfaction:  Is it morally justifiable to have poor people (and in this case, people like me in scads of debt) vote on the tax rates that rich people should pay for government services.  If Clinton is elected, whether this particular program is instituted or not, people at the high end of the tax bracket (including me!!) will likely see their taxes increase.  I don’t necessarily have a problem with this, particularly if we can see a higher level of service provided, but I do know people who feel like their income is being raided to pay for the poor decisions of other people (like me!!).

All in all, there are some good starts toward making college affordable, but there are still issues that need to get fixed to make it feasible, and maybe some other trade offs that need to happen in other areas.  If you are morally opposed to higher taxes, you probably won’t like this plan.

Donald Trump – Presumptive Republican Nominee

This one is a little harder to get a grasp on, because it doesn’t seem like Trump has provided an official college plan. Based on responses cobbled together by On The Issues, as well as general googling and Reddit, I’ve come up with the following list (let me know if I’ve gotten anything wrong!)

  1. Get the federal government out of the student loan business and revert to private banks.
  2. End federal subsidies and government loans, to fix the market and force college costs back down, after artificially inflating them for years.
  3. Make colleges have “skin in the game.”  Frankly, I’m still not sure what this plank means.  It appears to have something to do with sharing the risk of default, and encouraging colleges to only admit college-ready students.
  4. Make it harder to obtain loans for a liberal arts education at a “non-elite” school.

It’s hard to have a stance on Trump’s ideas without an official platform, but one issue I have with moving the loans back into private hands is that there is no mention of making the student loans dischargeable in bankruptcy.  That means that students will lose out on the federal income-based repayment system, which allows people like me the breathing space to find a good job that will allow repayment on the loans, without going through deferment or default.  Without the bankruptcy option, student loan companies can continue to charge interest (to cover their risk) but still enforce against broke students through judgments, which allow wage garnishment and sweeping out bank accounts for all but the most absolute broke cases.  In other words, without putting some of the risk of lending to students back on the banks, this policy does little to no good.

Plus side, there is no additional spending through government programs, and IF Trump can actually abolish the federal Department of Education, there may end up being significant savings at the federal level (although likely increased spending at the state level to make up for the loss in federal dollars).  However, the increased pressure on states and localities may end up increasing the differences in educational attainment between wealthy areas and poor areas, which may end up costing the US more in social services (although this may be an unsupported opinion).

In short, there aren’t enough details to hang a thorough analysis on, so it’s difficult to determine what the effect is likely to be.  However, if you have a general sense that government involvement in the student loan market creates inefficiencies and that removal of the government from the market will restore more sane demand/supply curves, this is a plan that is likely to appeal to you.