Here’s How Clinton’s Latest College Debt-Relief Plan Misses the Mark

Democratic presidential candidate Hillary Clinton has gotten some well-deserved rebukes for the limited college-debt relief plan she unveiled Tuesday in Denver for graduates who start new businesses.

“If Clinton wants to give away money to people who will eventually be wealthy, this proposal is a great idea,” writes Alexander Holt in Inside Higher Ed.

Similarly, Salon staff writer Ben Norton said that Clinton’s proposal would “inevitably disproportionately benefit the elite.”

As Clinton herself put it Tuesday, her plan is targeted to “make it easier for young people to become entrepreneurs” by allowing them to defer payments on their college loans for up to three years while they get their businesses up and running. For those who start businesses in distressed communities, entrepreneurs could have up to $17,500 of their student debt forgiven. The proposal was part of a larger “initiative on technology and innovation.”

Clinton may not have done this intentionally, but she has offered a proposal that fits neatly into the “makers vs. takers” right-wing narrative of the economy, one that exalts the so-called “job creators” but offers little if anything to the people doing those jobs.

For those people, there is the reality laid out this week in a devastating investigative article published by the Center for Investigative Reporting and Consumer Reports.

There is the story of Jessie Suren, “an energetic 28-year-old who wanted a career in law enforcement” but could not get her foot in the door after a job with the US Marshals Service fell through. She had borrowed $71,000 to pay for her college degree by the time she graduated in 2010. Six years later, she is working two low-wage jobs to struggle to pay off a loan balance that has grown to more than $90,000.

Or take Anita Brewer, who borrowed a total of $60,000 to attend the for-profit American InterContinental University’s Los Angeles campus starting in 2005, in hopes of starting a career in fashion design. She didn’t know that the university was on its way to being put on probation by an accrediting agency, and that three years later the campus would close, leaving her with school credits that she could not transfer to another university. Today, she’s degree-less, working low-wage jobs and struggling to pay $1,000 a month on her loan balance, which with interest and fees has risen to a gob-smacking $157,000.

“I sacrificed so much to go to school and get an education. But I can’t get an apartment, I can’t get a cellphone, I can’t get a car, I can’t get anything because my credit is shot to hell,” she is quoted as saying.

There is obviously no way that Brewer is going to start a business that could, if she qualifies, lead to her loan balance being reduced to around $139,000 — five years from now.

Matthew Chingos at the Urban Institute wrote that Clinton’s statement that entrepreneurship was being held back by high student loan debt “is based on shoddy evidence” from opinion polls. He goes on to say that “efforts to stimulate entrepreneurship through changes to the student loan system are likely to be inefficient and unfair.” One reason, he says, is that the people likely to get the largest benefit under Clinton’s proposal are not necessarily the people who need it most. Other critics point out that entrepreneurs often start from a position of advantage that enables them to take financial risks and access the resources they need to sustain their risk-taking. Clinton’s proposal hardly makes a dent in equalizing that playing field.

To be fair, this proposal is only a slice of Clinton’s overall proposal for moving toward affordable college. But even when taken in toto, Clinton’s college affordability plan is a small, incremental step up a mountainous problem.

The best plan would simply declare a college debt “jubilee” — a wholesale cancellation of the $1.3 trillion millstone on 42 million college students and graduates, from young millennials to retirees who are having their Social Security checks garnished by college debt collectors. Keeping that millstone on the necks of college students mainly profits lenders like Sallie Mae, which with the help of lawmakers in both political parties morphed into a colossus that has enriched a handful of executives and investors while leading such absurdities as the law that allows onerous college debts to be extracted from people even in bankruptcy. It also profits the federal government, which was projected by one Government Accountability Office report to get $66 billion in income from loans made from 2007 to 2012.

Yes, the debt “jubilee” idea is politically outlandish, but it is a solution that matches the scale of the problem. More pertinently, it is precisely the kind of audacious idea that needs to be on the table, with a movement behind it, if the public is to get anything other than approaches that single out a handful of people while leaving millions more behind.