NEW YORK • With Americans shouldering US$1.2 trillion (S$1.6 trillion) in student loan debt, and about eight million of them in default, presidential contender Hillary Clinton was scheduled yesterday to propose major new spending by the federal government that would help undergraduates pay tuition at public colleges without needing loans.
Mrs Clinton does not go as far as her Democratic rivals for the party's nomination in promising to end tuition debt altogether, since her plan would still require a family contribution that could involve parents' taking out loans to cover some tuition.
But her proposals, which would cost US$350 billion over 10 years and include new refinancing options for those already struggling with debt, are an aggressive response to what many Americans - Democrats and Republicans alike - see as a worsening crisis forcing young adults to move back home with their parents and struggle to get out from under repayment bills.
Under the spending plan, which was outlined by Mrs Clinton's advisers on Sunday, about US$175 billion in grants would go to states that guarantee students would not have to take out loans to cover their tuition at four-year public colleges and universities.
In return for the money, the states would have to end budget cuts to increase spending over time on higher education, while also working to slow the growth of tuition, although the plan does not require states to cap it.
Many states have reduced college spending sharply since the recession. One of Mrs Clinton's Republican rivals in the presidential race, Governor Scott Walker of Wisconsin, signed a two-year budget last month that cuts spending for the University of Wisconsin system by US$250 million. Tuition and fees for in-state residents at public colleges across the US have increased by more than 40 per cent since 2004 after adjusting for inflation.
Mrs Clinton would pay for the plan by capping the value of itemised deductions that rich families can take on their tax returns. The tax and spending elements of her proposal would need support from Congress - a tall order, since it is now run by Republicans - while the plan's goals would depend on support from state governors and legislators, more and more of whom have been Republicans recently.
But some education analysts said they believed her debt relief ideas would have a chance in a Republican-led House and Senate because anxieties about high tuition cross party lines.
"There is a lot of bipartisan interest in issues of college affordability and bipartisan support for Pell Grants, student loans and other federal programmes," said Mr Robert Shireman, who advised President Barack Obama and former president Bill Clinton on education issues, and who offered input on the plan to Mrs Clinton's campaign.
"The compact proposed by Hillary Clinton is a strong starting point for a discussion that zeros in on the issues that are in the public mind and have been raised by leaders in both parties: accountability, outcomes, college costs and manageable loan repayment," he said.
Mrs Clinton, who was to officially announce the plan at a campaign event yesterday in Exeter, New Hampshire, would also allow Americans to refinance private loans at lower interest rates; let students use their Pell Grants fully for living expenses; expand the AmeriCorps national service programme, which provides an education benefit and was started by Mr Bill Clinton, to 250,000 members from 75,000 members; and impose penalties on colleges whose graduates cannot repay their loans.
The Clinton proposals might fare better than those offered by her two main opponents for the Democratic nomination - Senator Bernie Sanders of Vermont and former governor Martin O'Malley of Maryland - because, unlike them, she is not relying mostly on the government to deal with student debt.
Colleges themselves would have to hold down costs and show improvements on graduation rates, for instance.
Ms Sandy Baum, an independent higher education policy analyst who advised the Clinton campaign on the plan, said it "doesn't pretend that the federal government can wave a magic wand and fix everything".
NEW YORK TIMES