The 2016 Presidential elections are getting into full swing, with the Iowa caucuses and the New Hampshire primaries only a couple of weeks away. So we thought, why not join the election coverage party?
Over the next two weeks, we are publishing a 3 part guide to the top 5 presidential candidates' (based on RealClearPolitics polling) stance on issues we care about deeply on the Borrowize blog: student debt, online lending and consumer protection, and small business growth.
Borrowize is not politically affiliated, so none of our coverage should be interpreted as endorsing or supporting any of the candidates. Think of this as the cliff notes to the various policies and opinions of each of the candidates.
Part 1 of 3 covers student debt and the cost of higher education. As of right now, there is an estimated $1.3 trillion in student debt outstanding, which is more than all American credit card debt combined. Not only that, but the problem will continue to get worse as the cost of higher education sky-rockets and graduates continue to struggle to find employment.
This is a major issue for millions of Americans and a topic that will likely get a lot of attention. Here are the top 5 candidates' plans on combating student debt (in order of general election polling):
Last fall, Hillary Clinton unveiled a plan called the New College Compact, which would allocate $350 billion over the next 10 years to make college affordable for all Americans. The plan is highly ambitious, but can be summarized into three sections:
- Make public colleges debt-free
- Cut interest rates for people struggling with student debt
- Expand existing financial aids to cover more people
The plan borrows a lot of the ideas from Elizabeth Warren’s Student Emergency Loan Refinancing Act, which was shot down by the Senate, but instead of funding it through a tax increase on the wealthy, it would rely on capping tax deductions.
Mrs. Clinton’s proposal combines cost cutting measures that would impact tuition costs for future generations with relief programs for recent graduates with existing debt.
To address the sky-rocketing cost of higher education, Mrs. Clinton would provide states with a total of $175 billion in grants to lower the cost of education and increase oversight of public university spending.
As for the $1.3 trillion of existing debt, Mrs. Clinton’s plan would make it easier for students to refinance loans at a lower rate, eliminate the for-profit model of federal loans, and create a flexible income-based repayment program.
Donald Trump has promised to make a “big announcement” on how to tackle student loans, but until now has not given many specifics. As such, we are forced to rely on conversations with reporters and comments during campaign rallies to get a better idea of his plan to tackle the student debt crisis.
During an interview with thehill.com last year, Mr. Trump signaled that he might take a more liberal approach to the student debt crisis, insinuating that he would continue to promote the loan forgiveness programs.
Mr. Trump pointed to the bigger issue that is tuition costs, acknowledging that the reason college costs are out of control is because students can borrow money from the federal government. He does not think the government should be making money off of student loans, and said “student loans are probably one of the only things the government shouldn't make money off – I think it’s terrible that one of the only profit centers we have is student loans”
However, most of his implied solutions come back to job growth, arguing that his focus and ability to improve the employment prospects of graduating students will go a long way in solving the student debt crisis.
Free public college tuition for all! No, really, that’s what Bernie Sanders proposes in his plan. Under Mr. Sanders’ College for All Act, the federal government would cover 67 percent of the costs, while states would account for the remaining 33 percent.
While that is the most headline-grabbing part of his plan, there are other features that are equally ambitious and beneficial for graduates with existing debt. For example, student loan rates (presumably those for non-tuition related expenses) would be reduced to 2.32 percent, and existing borrowers would have the ability to refinance their loans based on current interest rates (though those are set to increase).
How would the government pay for the roughly $70 billion in public tuition a year?
Mr. Sanders would put in place a Robin Hood tax on Wall Street, which would place a 0.5 percent tax on most stock transactions, and a lesser one on bond and derivative trades. This is not as radical as most thing. In fact, a similar tax is already in effect in more than 40 countries, including Britain, Germany, Switzerland and China, and is estimated to raise about $300 billion per year.
Ted Cruz recently told a crowd of Liberty University students that he took $100k in student loans, and that he only just recently paid it off. I’m sure this means he can relate to the pain that more than 43 million Americans are facing, but does it mean that he will make it easier for students to pay their loans off? Let’s examine.
In general, there has been little specifics disclosed on how Mr. Cruz would address the $1T+ student debt issue, but his broader stance on government involvement and spending suggests he would aim to cut some of the existing programs that benefit student borrowers. For example, he wants to shut down the Consumer Financial Protection Bureau and the Department of Education.
In the absence of a dedicated student debt plan, or any substantial comments on the issue, we took a look at his history in the Senate on policies tied to the student debt crisis.
Mr. Cruz voted in favor of Bipartisan Student Loan Certainty Act of 2013, which capped student loan interest rates and fixed them for life. He also voted against Elizabeth Warren’s Student Emergency Loan Refinancing Act, which would allow 25 millions of student borrowers to refinance existing loans at lower rates by raising taxes on people earning between $1 million and $2 million a year. However, that bill never gained much traction and has since been abandoned.
Marco Rubio’s plan to fix the student debt crisis focuses on addressing the high cost of education. Mr. Rubio unveiled his plan for reforming higher education on September of 2015, and it is highlighted by a few key reform ideas.
First, transform the accreditation process. Granting access to low-cost, innovative higher education providers will increase competition and drive down the cost of obtaining a high-class degree.
In addition, the plan calls for career and vocational education to be more widespread, allowing high school students to graduate with a certification to instantly enter a good-paying career.
With regards to paying for the education, Mr. Rubio’s plan calls for financial aid programs for working students to attend school at night, on weekends, or online.
For those paying off sizeable student loans, his plan calls for loan repayment to be tied to each graduate’s income, enabling those who earn more to pay back their loans faster, and those with lower incomes to make smaller payments over a longer period.