Hillary Clinton’s flawed plan for student debt relief. Aug 24, 2015, Vol. 20, No. 47 • By JAMES PIERESON
Nearly everyone recognizes that student debt has risen to a level that will be difficult to sustain, given the nation’s slow-growing economy and the sagging incomes of too many college-educated Americans. Nearly 40 million Americans carry some form of student debt; more than 7 million are in default on their loans, and many more have missed scheduled payments. The total amount of outstanding student debt is estimated to be $1.2 trillion, with about two-thirds of this sum underwritten by the federal government.
It is not difficult to figure out the reasons for exploding student debt. On the one hand, high school graduates and their parents understand that a college education is essential for entry into the narrowing world of high-paying professional jobs. College and university enrollments increased by more than a third between 2000 and 2014, from 15 million to more than 21 million students. At the same time, college tuition and fees have been growing at more than three times the rate of inflation for three decades now and at more than two times the growth in the median family income over the same period. In 2015, the average tuition (plus fees) for in‑state students at public universities is in the neighborhood of $10,000 per year and over $40,000 per year for students attending private universities. A fair amount of careful research suggests that these soaring costs are partly attributable to the increasing availability of loans encouraged by federal policy.
Hillary Clinton’s new $350 billion (over 10 years) proposal takes aim at this vast constituency of voters paying off student loans or worried about the costs of taking them on. She says that her proposal will enable most students to meet college expenses without taking on loans, a claim that is surely exaggerated in view of the scale and scope of her plan. At best it is a proposal to mitigate the problem somewhat by permitting borrowers to reduce interest rates on current loans and to use the carrot of federal funds to force states to invest more public funds in higher education.
The largest portion of this money ($175 billion) would go to encourage (bribe) state governments to invest more resources in higher education so that tuition charges can be reduced at four-year institutions and eliminated entirely for two-year community colleges. Under her plan, the Department of Education would make funds available to match state budget allocations for higher education and to reward states that keep a lid on tuition increases. She would also expand work-study programs to permit more students to work off college expenses during their student years. The combined federal and state funds, as much as $35 billion per year across the country, would theoretically allow states to maintain tuition at affordable levels for students so that loans would be unnecessary. This is a point worth emphasizing: She is not making tuition “free,” but rather substituting public funds for student-paid tuition.
Total tuition charges at all institutions (public and private) in 2015 will amount to around $300 billion, plus expenses for books, room, and board. A mix of federal, state, and private scholarships subsidizes a significant portion of this sum. The federal government, for example, spends approximately $30 billion per year on Pell grants to support tuition and other expenses for more than nine million students from lower-income families. Clinton’s contribution of $17.5 billion in federal funds per annum would make a dent in this package, but it is hard to see how it would ever allow reductions in tuition and fees to levels that would allow students to dispense with loans.
Appropriations for higher education in states across the country have fallen off by an average of 16 percent since the onset of the financial crisis in 2008. Clinton along with the liberal think tanks associated with the Democratic party claim that this is a major cause of tuition increases at public universities and thus a major source of the student debt crisis. This is a greatly exaggerated claim, however, since student debt was accumulating for decades prior to the financial crisis. The financial crisis may have exacerbated the problem, but it did not cause it.
Clinton should ask herself why so many states found it necessary to cut appropriations for higher education in the years following the financial crisis. The major reason was that governors and legislators had other priorities, among them paying for public employee pensions, meeting federal mandates to pay for Medicaid, welfare, and K-12 education, and finding revenues to meet law enforcement and transportation budgets. It is not hard to understand why higher education has been squeezed out in the keen competition for state funds.
Clinton's plan solves the college debt problem like someone snorting more cocaine solves his cocaine addiction. 11:32 AM, Aug 10, 2015 • By SHOSHANA WEISSMANN
On Monday, Hillary Clinton is unveiling her solution to college debt. The solution is nothing new — it makes taxpayers pick up the bill.
Unsustainable public debt closer to home Aug 3, 2015, Vol. 20, No. 44 • By IRWIN M. STELZER
Is America, or Illinois, or Chicago the next Greece? The answers are “Yes, if . . . ,” “No, but . . . ,” and “Perhaps.” Greece joined what was then the European Economic Community even though it had no business applying for admission, and the existing members had no business allowing it entry, as the community’s finance ministers concluded, only to be overruled by France and Germany, whose leaders were hoping to construct an institution that would make another continental conflagration impossible: Full speed ahead, economics be damned.
The European Union is bailing itself out, not the GreeksJul 20, 2015, Vol. 20, No. 42 • By CHRISTOPHER CALDWELL
A mass outbreak of syphilis, the radical economist and member of parliament Costas Lapavitsas told an interviewer, is about the only thing the European political establishment did not threaten Greece’s voters with before the country’s early-July referendum.
5:08 PM, Jul 1, 2015 • By GEOFFREY NORMAN
One reads of the crisis in Greece. And the one much closer to home in Puerto Rico. The crisis, that is, that inevitably comes after spending too much and taking on more debt than it is possible even to service, much less pay down. One thinks of how unfortunate it is for the people who will now redeem with pain, the promises made by the politicians of previous generations.
4:28 PM, Jun 17, 2015 • By GEOFFREY NORMAN
The subject of debt – how much and how tolerable – slipped into the shadows for a time. But yesterday, it reappeared. As Rebecca Shabad of the Hill reports:
5:30 PM, May 15, 2015 • By DANIEL HALPER
President Obama has reported less than $1,001 in his savings account. The disclosure comes as part of the president's annual Executive Branch Personnel Public Financial Disclosure Report.
The only savings account listed by the president is a "JP Morgan Chase Private Client Asset Mgmt Savings Account," according to the disclosure reports.
9:09 PM, Feb 2, 2015 • By DANIEL HALPER
President Obama's budget is not likely to be passed by Congress. But if it did, the U.S. would be about $26.3 trillion in debt.
The numbers come from Obama's budget, and were sent around by the Republican National Committee to highlight the heavy spending in the president's proposed budget:
9:00 PM, Feb 2, 2015 • By DANIEL HALPER
Senator Jeff Sessions, the former ranking member of the Senate Budget Committee, says President Obama's proposed budget "raises taxes by $2.1 trillion."
"The President has sent another tax-and-spend budget to Congress," Sessions says in a statement responding to Obama's proposed budget.
A collision between national sovereignty and the European Union in the birthplace of democracyFeb 9, 2015, Vol. 20, No. 21 • By CHRISTOPHER CALDWELL
In Athens in mid-January, two weeks before the election that would make 40-year-old engineer Alexis Tsipras Greece’s new prime minister, a bunch of cleaning ladies explained to me why they planned to vote for his party, the Coalition of the Radical Left (Syriza, for its Greek acronym). We met where they had lived, at least part of the time, for the past 16 months: among tents on the sidewalk in front of the economics ministry in downtown Athens.
3:23 PM, Jan 29, 2015 • By IKE BRANNON
New York governor Andrew Cuomo, not content with President Obama’s proposal to make junior colleges free, recently introduced his own plan for New York to essentially waive the first two years of student debt payments for college graduates living in the state.
9:10 AM, Jan 20, 2015 • By DANIEL HALPER
Under President Obama, $7.5 trillion has been added to the national debt. The number is being highlighted by the Republican National Committee ahead of President Obama's State of the Union address, which will be delivered tonight from Washington.
1:47 PM, Jul 30, 2014 • By MARK HEMINGWAY
As I've made pretty clear, I am not a fan of the "explanatory journalism" trend that purports to take an empirical approach to explaining complex issues. Its chief practitioners are a bunch of young, terribly biased journalists who tend to treat politics and policy as some sort of game, even as they broadcast their ignorance. Anyway, if you want a concise example of why explanatory journalism is bad—so pure and crystalline it could have been produced by Walter White—let me direct you to this Vox.com piece on Medicare.