The start of a new school year brings a sense of new beginning and a fresh start for so many, but reality hits as the increasing cost of college can bring many young college students stress. In the past few weeks, Hillary Clinton has rolled out her newest policy proposal called “New College Compact” and explains it as “a pledge to tackle the cost of college, making low interest grants and loans more available and ensure the federal government “will never again profit off student loans for college students.”’ It aims to make public colleges debt-free for students, to cut interest rates for people struggling with debt from loans taken out to pay for college, and to expand some existing aid programs to cover more people. Not sure what this will entail economically and the consequences that will follow? Look no further, FFL is here to break it down for ya.
First, the cost. Her plan would cost taxpayers $350 billion over the next 10 years. $200 billion to make college more affordable and another $150 billion to pay down the balance of those who currently owe student debt. How does she justify this $350 billion dollar plan? By taxing the high paid taxpayer, of course. Hillary claims this plan will “fully paid for by limiting certain tax expenditures for high-income taxpayers.” This would include cutting back on the value of itemized deductions (including deductions for charitable giving) for high earners, pending Congress’ approval. This is a perfect example of Washington’s way of throwing money at a problem to try to create a false sense of solution. Throwing money at this student-loan crisis is actually the opposite of what needs to happen. A recent study by the New York Federal Reserve validated concerns of many economists and policy analysts when it found that “on average, for a $1 increase in the subsidized-loan cap, tuitions rose by as much as 65 cents.” What this means is that the government has been entirely too generous in giving out loans and creates an abundance of money for colleges and universities. (for example, Texas Tech has a WATER PARK on campus… yes, you read that correctly… a WATER PARK) These kind of pimped out campus perks and amenities used for recruiting purposes and the abundance of student loans have caused tuition to increase dramatically nationwide in the past few years.
Next, the interest rates. Clinton calls for a cut in loan interest rates for those who currently owe student debt in this new plan. Interest rates are not just a made up number that sounds good and dandy in your head. They measure the risk of the borrower not being able to repay the lender. Looking at the current number of defaulters on student loan payments, one could argue that the interest rates on student loans are already too low.
Lastly, the further saturation of college degrees. A Federal Reserve study found that half of recent graduates were working in jobs that didn’t require a college degree or not employed at all. If demand for college graduates decreases and supply remains unchanged, a graduate surplus occurs, leading to higher unemployment among graduates. We have too many young people strapped with debt they can’t pay back and degrees from universities that the economy cannot support. To put it simply, there is not enough of jobs to compensate for the amount of college graduates going into the workforce. Unfortunately, a degree doesn’t always equate to a job right after graduation. Clinton’s plan would further promote this graduate surplus. College should be an opportunity, not an entitlement. College is not for everyone. We have different talents, interests, desires, skills. The individual should go into fields that tie into those interests and strengths, regardless of whether they require college or not. We should also be promoting tradesman and vocational schools, enlisting in our military, getting an entry level job, and/or entrepreneurship. College is not the only available avenue for someone’s version of success.
In conclusion, it looks to me that Hillary is looking for a way to score the Millennial vote and has decided to use them as pawns to further support her government dependency, liberal agenda, just like her other fellow Democratic candidates. Sure, the way Mrs. Clinton describes her new compact might SOUND good and attractive to a young millennial with a stack of student loans under their belt, but when you break it down, you have to wonder if Hillary has ever taken a basic economics class.
*The opinions expressed in this column are the author’s own and do not necessarily reflect the view of the FFL organization.*