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Hillary Clinton’s Meager Proposal to Help Holders of Student Debt

When the leadership of the American Federation of Teachers (AFT) decided to endorse Hillary Clinton in July, many union members were not happy.

The AFT is now engaged in a propaganda campaign directed at its members urging them to support Clinton’s election.

Following the first debate among the Democratic candidates, an October 15 AFT email under the headline Clinton Stands Out in Substantive Democratic Debate declared that:

“… the event featured thoughtful, substantive answers and real policy ideas to help working families, protect our country and preserve our environment. And no candidate was stronger than Hillary Clinton, the AFT’s endorsed candidate for the Democratic primary.” [emphasis added]

This same email quotes AFT President Randi Weingarten:

“Hillary presented bold solutions to help American workers and their families—from expanding early childhood education and paid parental leave, to reining in Wall Street and college debt and protecting Social Security and our environment. And she showed that she understands what it takes to govern.” [emphasis added]

In a separate email sent shortly after the debate, AFT President Weingarten wrote:

“The AFT endorsed Hillary because our members and leaders know she’s a champion for working people who’s ready to fight for our values and aspirations.” [emphasis added]

Student Debt Background Information

Much of the Fall 2015 issue of the AFT publication, On Campus, is devoted to issues concerning student debt. One is informed that going into debt is “the primary way individuals pay for college.” This has resulted in “more than 40 million Americans” carrying student debt that now totals $1.3 trillion. Thus the average student debtor owes more than $30,000.

From On Campus, one learns that this need to borrow money to pay for college reinforces and reflects various forms of inequality in the United States. It exacerbates class differences by hitting “low-income families much harder, because they have to borrow so much more to even get in the door.” Many of those most burdened with student debt consist of Black and Latino households which “have just a fraction of the wealth of white households” and, “black and Latino students are substantially more likely to cite financial reasons for dropping out.” Furthermore, “There is plenty of evidence that” a student debt “can reduce lifetime wealth, affect important life decisions and resonate long after a borrower is out of school.”

Students from wealthy families, who are much more likely to graduate from college debt free, have more choices about their education which paves the way for more choices about their future.

On Campus also covers some of the nightmares surrounding student debt. In 22 states, a debtor who defaults on a student debt “can be stripped” of a professional license. “Debt collectors can garnish” Social Security benefits of a retired person over 60 struggling to pay a student debt.

As the costs of higher education have increased, so has student debt. One reason is that “need-based aid covers less and less of the cost of college.”
A big “culprit” behind the rising costs of higher education, resulting in increased borrowing, is state budgets that fail to properly fund higher education. A particularly responsible person identified is Republican Wisconsin Gov. Scott Walker, but he is not alone. See my article on the funding of education in California brought to us by a state government dominated by the members of Hillary Clinton’s political party.

Obviously, the financial industry also benefits from receiving payments with interest resulting from this increasing debt. Helping the financial industry benefit are legal requirements. A student debt usually is not forgiven when declaring bankruptcy unless one has an undue hardship.

Clinton’s “Rescue” Plan

Clinton supporter AFT President Randi Weingarten is quoted in On Campus saying, “We have to mitigate the debt that’s already due.”

The same article informs us that “Presidential candidate Hillary Clinton has made student debt a central pillar of her campaign.” Clinton is quoted pledging to find ways to “make college more affordable… make sure no one graduates with crushing debt.”

So what does a “champion for working people,” Hillary Clinton, offer as a “bold” solution to rein in “crushing” student debt?

Clinton has proposed the “New College Compact.” She says “everyone’s going to have to step up to the plate… We can’t fix the problem of rising costs and rising debt by throwing more money at the problem.” However, as pointed out in On Campus, she plans to throw in money–about $350 billion over 10 years.

Were all $350 billion of Clinton’s New College Compact just spent on debt relief, the 40 million people holding student debts would still owe over $900 billion, but that is not her plan. Clinton’s website indicates that her proposal is for about one-third of the $350 billion to be used to soften the burden of student debt.

The biggest portion of debt relief in her plan is described in On Campus, “For those who already struggle with debt, the compact would feature refinancing to lower interest rates. Typical borrowers could save $2,000 over the life of their loans.” [emphasis added]

This part of Clinton’s “bold” solution provides the current typical debtor relief amounting to less than 7% of the current principal owed. With interest payments, the total eventually paid on a loan is far greater than the current average principal of over $30,000.

According to the Washington Post, Hillary Clinton disclosed that she: “…delivered 51 speeches in 2014 and the first three months of 2015, earning more than $11 million.”

That comes to over $215,000 a speech. If an average speech lasts an hour, and she is paid by the second, Clinton’s student debt plan offers the current average debtor relief of less money than she is paid speaking for 34 seconds.

Is Clinton’s student debt plan an example of her “bold solutions to help American workers and their families” who she supposedly champions?
Given what Clinton is offering to those who already struggle with debt, would one be wise to have concerns about her plans to provide meaningful solutions to any of our problems?

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Rick Baum teaches Political Science at City College of San Francisco. He is a member of AFT 2121.

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