The 2016 presidential debates will be interesting on many levels. One debate topic will be how each candidate plans to resolve the $1.3 trillion student loan crisis. Here is a brief summary of where each candidate currently stands on the issue.
Community colleges will be free
What this means: Students will be able to get an Associate’s Degree for free and then transfer to a 4 year university to complete the two years they would need to receive a bachelor’s degree, essentially halving the cost of what a 4 year program would cost.
4-year colleges will be free for working families by 2021
Families with income up to $125,000 will pay no tuition at in-state four-year public colleges and universities. And from the beginning, every student from a family making $85,000 a year or less will be able to go to an in-state four-year public college or university without paying tuition.
For borrowers who have already graduated and will not be able to benefit from free tuition in the future, Hillary’s plan provides the following:
Entrepreneurs will get to defer their loan repayments for up to 3 years with NO PAYMENTS OR INTEREST
For social entrepreneurs and those starting new enterprises in distressed communities, her plan will provide up to $17,500 in loan forgiveness. Where was this program when I needed it? (sigh…)
Student Loan Refinancing
Under Hillary’s refinancing plan the typical borrower will be able to save $2,000 over the life of their loan. Right now the federal government is making a KILLING by charging borrowers interest rates well above the rates offered by private student loan refinancers such as SoFi and CollegeAve Student Loans. Uncle Sam is on track to make $66 BILLION in profit from recent federal student loans.
For information about Hillary Clinton’s stance on student loans, click here.
Who’s going to pay for it?
Hillary expects the plan to be fully paid for by limiting certain tax expenditures for high-income taxpayers. She also plans to explore more options to encourage employers to help pay down student debt. One way she could encourage employers would be to approve H.R. 3861: Employer Participation in Student Loan Assistance Act, which allows employers to make tax-deductible contributions towards student loans.
In addition, under Hillary’s plan students will be expected to work 10 hours a week to help defray the full cost of attendance. Where these jobs will come from is still unknown, but Hillary promises she will “push to expand work opportunities that build career skills and introduce students of all backgrounds to public service careers.”
At a press conference on July 27th, Trump said he plans to release a position on the student loan crisis within the next four weeks. As of September 2nd, Trump has yet to release a detailed plan. So far, Trump has promised jobs for students with loans and hinted at a possible loan restructuring when he said student loans are “probably one of the only things the government shouldn’t make money off ”.
Who’s going to pay for it?
Trump has suggested eliminating the Department of Education, removing the federal government from the student loan system and having loans come from private lenders. He has also suggested holding colleges and universities accountable for student loan defaults.
If you have federal student loans there is hope that something will be done to help alleviate your burden. However, regardless of the promises being made or plans being written, both candidates will have to face the added challenge of getting their plans approved by Congress once elected.