What Clinton's college affordability plan could mean for you
In a bid to make college more affordable, Hillary Clinton聽聽this week, most notably pledging free tuition for students at in-state public universities. The move expands on a聽plan that the Democratic Party鈥檚 presumptive presidential nominee unveiled in August 2015.
The Republican presumptive nominee, Donald Trump, hasn鈥檛 released a higher-education reform plan, and the Trump campaign did not respond to NerdWallet鈥檚 request for comment.
The Clinton campaign estimated that her original proposal, called the聽, would cost $350 billion to implement 聽over 10 years. It would be funded by limiting some tax deductions for high-income earners.
Here are five key aspects of Clinton鈥檚 entire plan:
1. Free tuition for qualifying students
Clinton promises to eliminate聽tuition at in-state public colleges for those with combined family incomes of up to $125,000, and seeks聽to fully implement this plan by 2021. That income threshold would cover more than 80% of all families in the U.S., her聽campaign says. Students from families with a combined income of up to $85,000 a year would be able to get free tuition at qualifying universities immediately, should聽Congress approve the plan.
Additionally, Clinton proposes to let all students attend community college tuition-free. Kevin Fudge, the manager of consumer advocacy and government relations for American Student Assistance, a Boston-based student loan nonprofit, says this part of Clinton鈥檚 plan is more realistic than her proposal for free tuition at in-state public colleges.
Borrowers attending private four-year colleges wouldn鈥檛 qualify for free tuition under Clinton鈥檚 plan. But it聽would cut interest rates on federal student loans 鈥渘early in half,鈥� she says.聽聽for direct subsidized and unsubsidized undergraduate loans were 4.29% for the 2015-16 school year.
2. Student loan refinancing through federal government
Borrowers would also have the opportunity to refinance their federal student loans at current lower rates via the federal government. The Clinton campaign estimates this aspect聽would impact 25 million borrowers, with typical savings of $2,000 over the life of a loan.
鈥淚f you can refinance your mortgage or your car loan, you should be able to refinance your student loan, too,鈥澛燙linton has said.
Borrowers of聽federal loans currently are allowed to聽, which involves losing聽federal loan benefits, including access to income-driven repayment plans and loan forgiveness programs.
3. Streamlined income-based repayment plans
Clinton wants聽to 鈥渟implify, expand and develop options for automatic enrollment鈥� in income-based repayment plans. Her聽proposal also would help eliminate confusion for borrowers, who currently have four聽聽to choose from, says Zakiya Smith, strategy director for Indianapolis-based聽Lumina Foundation, which provides grants aimed at improving the higher education system.
鈥淭his would consolidate the number of plans to just one, which I think a lot of politicians and policymakers have been talking about on both sides of the aisle recently,鈥� Smith says.
Clinton proposes to let all borrowers cap their monthly payments at 10% of their income and get loans forgiven after 20 years of making on-time payments, or after 10 years of payments for borrowers who work in public-interest positions. She would also implement automatic enrollment in the payment plan. Borrowers now have to opt in to one of the four income-driven plans, and each plan has slightly different requirements and terms.
4. Three-month moratorium on payments for federal borrowers
Clinton proposes to offer a聽聽for all federal student loan borrowers, to be implemented by executive action. The three-month pause, she says, would allow聽the Department of Education to help borrowers sign up for income-driven repayment plans and consolidate their federal loans. The Clinton campaign did not immediately respond to NerdWallet鈥檚 request for more details about the proposed moratorium, which was added this week聽to the 2015聽higher education plan.
5. Restoration of year-round Pell Grant funding
Qualifying low- and middle-income students would once again be able to use Pell Grant money to pay for summer classes. Year-round Pell Grants, which were eliminated in 2011, could potentially help low-income students more than any of the other measures in Clinton鈥檚 proposal, said Temple University economics professor Doug聽Webber in a tweet on July 7.
Senatorial efforts to restore year-round Pell Grant funding were blocked Thursday by a subcommittee at the U.S. House of Representatives.聽
Other aspects of Clinton鈥檚 plan
Clinton also proposes to聽simplify the Free Application for Federal Student Aid process, known as the聽; provide loan deferment and forgiveness to qualifying aspiring entrepreneurs; encourage employers to help employees repay student loans; and increase federal funding on campuses that support college completion. Her plan聽also incorporates bipartisan policies like聽, which penalizes colleges when too many of their graduates default on their loans.
Anna Helhoski and Teddy Nykiel are staff writers at NerdWallet, a personal finance website. Email:聽补苍苍补蔼苍别谤诲飞补濒濒别迟.肠辞尘听辞谤听teddy@nerdwallet.com. Twitter:聽聽辞谤听.
NerdWallet writer聽Brianna McGurran contributed to this report.
This article first appeared at .
