Blog: Higher Ed Beat

Debt-Free College: Why It’s News Now

As Democratic presidential hopefuls assemble in Las Vegas today for their first formal debate, one topic that has received little airtime during the Republican face-offs is likely to garner far more attention: the high cost of attaining a college degree.

Three of the five Democratic candidates scheduled to speak tonight have released detailed proposals that seek to reduce dramatically the amount of debt students might accrue on their way to a college degree, including the field’s two front-runners: Hillary Clinton and Bernie Sanders, who’s an independent but sides with Democrats in the Senate.

Political experts who spoke at EWA’s Higher Education Seminar at Valencia College last month say the campaign for debt-free college could be the new flagship issue for the Democratic party, assuming the mantle after affordable health care – the party’s signature political rallying cry for a generation – was written into law by President Obama in 2010.

“Health care has receded as an issue,” said Terry Hartle, chief lobbyist of American Council on Education, the nation’s largest higher education association for colleges and universities. “That used to be the centerpiece of Democratic presidential campaigns for a long time. … And higher education now occupies that place because many families care a great deal about their health, and they care about college education for their kids.”

But like the quest for expanded health care, debt-free college can come in many forms, with some permutations considered more liberal than others. Former Secretary of State Hillary Clinton’s plan would allow borrowers to refinance their debt, a component that’s also included in Sen. Bernie Sanders’ proposal and in the plan of Martin O’Malley, formerly governor of Maryland. The Sanders higher education overhaul would grant free tuition at any public college or university irrespective of the student’s income; Clinton’s plan would effectively charge students based on what they can pay.

While proponents of the senator’s proposal credit him for creating a simple formula, some see an irony to Sanders’ higher education overhaul. “He wants to pay for his plan by taxing carried interest [a tax benefit wealthy Americans enjoy],” said Hartle. “So he would tax hedge fund managers to pay for his plan, but then he’d give their kids free college.”

All three candidates have policies in place to encourage states to hold the line on rising tuition by offering them incentives like federal cash. O’Malley would like to cap tuition at no more than 10 percent of the state’s median income for four-year public schools and 5 percent for two-year colleges. The other proposals over the duration of their plans would pour hundreds of billions of dollars into state coffers with a combination of carrots and sticks.

Some ideas appear contradictory to analysts. Sanders would mandate that all public colleges and universities maintain at least 75 percent of their teachers as tenured faculty. That adds thousands of dollars per instructor in wage costs at the same time that colleges would be tasked with reducing the expenses. The move would, however, be a boon to low-paid instructors at colleges, like adjuncts, who typically earn $20,000 to $25,000 a year. Still, recent studies show that state disinvestment in higher education, not building or staff expenses, accounted for the lion’s share of recent increases in college cost for students.

Perhaps what’s remarkable about these competing proposals, though, is that they exist at all. When scrimping for change to fund major government programs and final-hour congressional scrambling to avoid government shutdowns have become common, floating federal legislation that would set the treasury back $350 billion to $700 billion – depending on the debt-free plan – is astonishing.

According to Adam Green, co-founder of the Progressive Change Campaign Committee, the push for debt-free college aligns with the Democratic party’s game plan to win over voters. After the 2014 midterm elections, Green says Democratic strategists argued the party’s huge losses were the result of a poor get-out-the vote campaign. “Our main point was, ‘no,’” Green said. “Democrats lost because the Democratic Party brand was not associated with big, bold economic populist ideas that would be game-changing in the lives of millions of Americans.”

“It was an election about nothing. And when it’s an election about nothing … the people that Democrats need to vote — the young people, people with multiple job – are least prone to vote,” Green said.

Late in 2014, his organization launched the Big Idea Project, which asked voters and lawmakers to submit major policy changes that were then put to a vote. To lend the project credibility, the Progressive Change Campaign Committee ensured that top lawmakers like Nancy Pelosi, Harry Reid, and Chuck Schumer would review the most popular suggestions. Thousands of proposals trickled in, and more than 1 million online votes were cast for the most popular idea. The winner was debt-free college.

A poll of 1,500 likely voters confirmed the popularity of the debt-free idea, Green said, and his organization circulated the findings to Democratic party leaders. That included Sen. Schumer, “someone we don’t work with a ton; he literally represents Wall Street,” Green said, but who heads the Democratic Policy Committee, which is in charge of finding fresh ideas for the Democrats to rally around.

The meeting set in motion a series of policy workshops among congressional staffers, paving the way for resolutions in the Senate and House of Representatives that call for debt-free college in the United States.

That the idea has resonance is no surprise, said Jennifer Wang, policy director at the left-leaning organization Young Invincibles. “If you talk to young people, you’ll often hear that they’re thinking about college affordability in terms how things have changed since their parents’ generation,” said Wang. “So they’ll say, ‘My mom went to college in the 80s and worked full-time at a minimum wage job and could afford the entire cost of her public college — not just tuition — but more.’” That reality is laughable to people under 30 today, Wang said.

But while the demand for debt-free college is real, serious questions need to be answered about what gets funded and who pays. “If we have limited resources, do we want to help a recent college graduates or do we want to put things in place for the next generation of college grads?” Hartle said.

“If students should not pay for higher education, who should pay?” asked Sandy Baum, a higher education scholar at George Washington University who advised the Clinton campaign. “If we’re not going to have [students] pay before or after, it’s going to have to be people who didn’t go to college. Somebody has to pay.”

Baum argues that the moniker “debt-free college” is misleading, anyway. Federal programs like the Pell grant and state aid for low-income students virtually cover the entire cost of tuition at community colleges and some public four-year institutions. What students do need to borrow for are the living expenses – housing, food, transportation and school supplies.

“It’s not like free high school where everyone lives with their parents … We are talking about how people live,” she said.

Nor does Baum believe borrowing for college is necessarily “a bad thing.” As an investment, it pays off remarkably with higher average wages and lower unemployment rates compared to workers who don’t attend college. She faults the media for glomming onto attention-grabbing numbers that disguise the larger problems in higher education affordability. While it’s true college debt exceeds $1 trillion in the United States, much of that is being held by top earners who attained degrees that proved dividends for their careers. “About half of the outstanding debt is held by the top quarter of the income distribution,” Baum said, while the bottom quarter of the income earners maintain just 11 percent of college debt.

A recent study also shows that much of the surge in postsecondary debt can be attributed to students who attended for-profit schools or community colleges. Combined, adults who attended these schools accounted for roughly half of all federal loan borrowers who were repaying their loans and 70 percent of adults who defaulted on their loans, suggesting the educations they received did not translate into worthwhile jobs.

And while debt-free college largely has been a Democratic Party issue, Hartle expects Republican candidates to ramp up their talking points on this fast-moving topic. “Republicans at this point are talking to primary voters, and this issue just isn’t a matter of concern to Republican primary voters. When they get to the general campaign, it will come up,” Hartle said, because the party will be targeting the same centrist voters as Democrats.

No matter how one slices it, families have been shouldering a much heavier load for completing a college degree. Nicole Smith, an economist at Georgetown University, said during EWA’s higher education conference that whereas in the 1980s the ratio of paying for college was 60 percent federal, 33 percent state, and 7 percent family, today families front half the costs while the states contribute just 16 percent.

The changing demographics of who’s going to college are adding urgency to these debates on the price of a degree. What was once a pathway for largely high-income families is fast becoming a prerequisite for acquiring a job that pays a living wage, adding millions of Americans to the postsecondary shuffle. The cost of a college education is an issue that’s here to stay. Whether it’ll join affordable health care as the policy plank that took decades to become law is an open question.