Loan refinancing, grants key to Clinton's college affordability plan

Reuters News
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Posted: Aug 10, 2015 12:04 AM

By Amanda Becker

EXETER, N.H. (Reuters) - Democratic presidential candidate Hillary Clinton unveiled a plan on Monday to make college more affordable, vowing to increase access to tuition grants, allow graduates to refinance loans at lower interest rates and streamline income-based repayment plans.

"No family and no student should have to borrow to pay tuition at a public college or university, and everyone who has student debt should be able to refinance it at lower rates," Clinton said at a campaign stop in New Hampshire.

There are more than 40 million students and graduates in the United States with education debt amounting to a collective $1.2 trillion, exceeding debt from credit cards, auto loans or home equity lines of credit.

Making college more affordable has been an early theme for Clinton since she launched her White House bid in April.

The Democratic front-runner has frequently lamented the high interest rates on some college loans. Refinancing would allow graduates to invest in business or buy homes instead, she has said.

Clinton chose to release her college plan in New Hampshire, which holds the second nominating contest in the presidential race, because its graduates carry the country's highest debt burdens. Community college in New Hampshire costs twice as much as in neighboring Maine.

Clinton's proposals would cost $350 billion over 10 years, paid for by capping itemized tax deductions at 28 percent for the wealthy, her campaign said.

That mirrors budget proposals made by President Barack Obama that have been unpopular with the Republican-led U.S. Congress, in part because the capped deductions would include charitable donations.

"This has to be a choice, and so what we’re doing is setting up our side of the choice," Clinton told reporters.

Clinton is fighting a challenge from the left from Senator Bernie Sanders of Vermont. Her student debt proposal was praised by liberal groups and will be closely watched by the young voters she needs to win the general election in November 2016.

Clinton's plan would allow graduates to refinance existing loans at current rates, and would consolidate four existing programs that allow graduates to make income-based loan payments into one that caps repayment at 10 percent of income, with the balance forgiven after 20 years.

A grant program would be available to states that commit to a no-tuition guarantee at community colleges and a no-loan guarantee at four-year public colleges and universities.

(Editing by Chris Reese, John Whitesides and Jonathan Oatis)