In the 21st Century, a college education is more important than ever. Hillary Clinton believes it's time for a new bargain with the American people – a bargain that gives all Americans willing to work hard the tools they need to get ahead. Her plan will make college more affordable and accessible so that every American who has earned it and wants to go has the chance to get a college degree.
By providing a $3,500 tuition tax credit—more than 50% of the cost of tuition at the average public institution—and increasing Pell grants, Hillary's plan will unlock the doors to higher education for millions of young Americans. In addition, Hillary will simplify the student aid process and strengthen incentives for students interested in public service.
"When it comes to higher education – we shouldn't be playing catch-up with the world – we should be leading it. Because the skills and knowledge of our workforce will determine whether America can compete and win in the global economy," Clinton said.
"I believe that college shouldn't just be a privilege for the wealthy – but an opportunity for anyone with the talent, determination and ambition to learn. And I believe that every American should have access to lifelong learning opportunities – from apprenticeships, to community college, to the most select four-year institutions.
"This tax credit is at the heart of my plan – the key to unlocking the doors of higher education for students across America, many of whom never dreamed they'd be able to attend. And the key to unleashing the power of the American economy as well."
As President, Hillary will make college more affordable and accessible by:
- Lowering the cost of college through a $3,500 tuition tax credit, enough to cover more than 50% of the cost of tuition at the average public institution for many families.
- Increasing the Pell Grant.
- Strengthening community colleges and training programs.
- Improving college graduation rates.
- Providing additional aid for people who do public service.
- Simplifying student aid.
- Providing clear information about the real cost of college well in advance to help families plan.
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Expanding Access to the American Dream:
Hillary Clinton's Plan to Make College Affordable
for America's Families
The Challenge
The most important doorway into the middle class is education beyond high school. Today a college graduate earns twice as much as a high school graduate. That is a million-dollar bonus over the working lifetimes of today's college seniors. But college is still out of reach for many students from middle class and low-income families. Only 7% of students from low-income communities get a B.A. by age 26.[i]
One of the most significant obstacles to finishing college is the expense. In the past 25 years, the average cost of tuition and fees has risen faster than personal income, consumer prices and even health insurance.[ii] It has gone up 35% in the last five years alone.[iii] As a result, the average student graduates with $20,000 in debt and many students graduate with the equivalent of a mortgage in student loans.[iv]
Hillary's Plan to Make College Affordable and Accessible: Hillary will take action to put college degrees back in reach to for middle- and low-income families. Her plan will:
Create a New $3,500 College Tax Credit. Hillary is proposing to more than double the HOPE tax credit, raising the maximum amount of benefits that students and their families can receive from $1,650 to $3,500. This new credit will cover more than 50% of the typical cost of public colleges and universities and more than the full cost of tuition for community colleges. Taxpayers will be able to claim 100% of the first $1,000 of college expenses and 50% of the next $5,000 under this new credit. This new credit will also be partially refundable in order to increase its value to low-income individuals. It will phase out in a manner similar to the current HOPE credit and will also be "advanceable" to allow families to receive the tax credit when their tuition bills are due instead of 16 months later.
Increase the Maximum Pell Grant. The median income of Pell Grant recipients was $17,692 in 2003-04, compared with $55,287 for all other undergraduates. When the Pell Grant was implemented, it covered 99% of the full cost of a two-year college, 77% at a four-year public school and 36% of a private school. Today, it has fallen to half that (62%, 36%, and 15%, respectively).[v] The College Cost Reduction Act significantly increased the Pell Grant to $4,800 in the 2008-2009 school year. As President, Hillary is committed to maintaining the value of the Pell Grant by annually adjusting it to take account of rising college costs.
Strengthen Community Colleges: Forty three percent of undergraduates start their postsecondary education at community colleges.[vi] Community colleges are on the cutting edge of most major workforce training initiatives around the country, and give students the core tools they need to pursue further education or enter well-paying occupations. Yet, too often community colleges are given second-class treatment in our postsecondary education system. They aren't ranked by U.S. News and World Report. And four year colleges and universities frequently refuse to accept course credits from community colleges, virtually ensuring that a great number of community college students will never receive their B.A. Hillary's plan will provide $500 million in incentive grants for investments by community colleges to ensure that students complete their degrees, and in partnerships between community colleges and four-year colleges to increase graduation rates at community colleges and promote smooth transfers from community colleges to a four-year college or university.
Create a Graduation Fund to Increase Graduation Rates. The U.S. used to rank first in the world in our percentage of young people with a postsecondary degree; now we have fallen to seventh, not because our young people don't try but because too many don't finish. Today, 25% of students drop out of college after the first year,[vii] and every year, half a million students start college at a four-year institution and fail to earn a bachelor's degree within six years. We need to invest more in college, but we also need to hold colleges accountable for results. The income gap between college graduates and high school graduates has more than doubled since 1980. However, those with some college but no degree enjoy little of that advantage and have seen little gain. The $250 million Graduation Fund will set out to close the diploma gap with incentive grants that challenge four-year colleges to launch performance-based efforts to improve their graduation rates, especially among low-income and minority students.
Support Apprenticeships and Workforce Training Initiatives. Apprenticeship programs that prepare specialty-skilled workers in manufacturing have decreased dramatically in number and size during the past 20 years, creating an urgent need for skilled workers, particularly in manufacturing. [viii] Hillary will provide $250 million to support innovative on-the-job training and apprenticeship programs that are aligned to the needs of the local economy. These programs, like the Machinists and Boeing Joint Apprenticeship program called "Quality Through Training," combine directly relevant skills development with academic training. Hillary wants to encourage more employers to develop demand-driven training programs that can prepare the next generation of skilled workers and grow our economy.
Make College Affordable for Those Who Serve in AmeriCorps. When President Bill Clinton created AmeriCorps in 1993, the Education Award covered 47% of the total cost of a four-year public school. Today – 13 years later – the amount of the education award has stayed the same while tuition and fees have grown dramatically. Hillary will double the education award – now called the Segal Education Award – to $10,000 to get it back on pace to covering a meaningful portion of the cost of going to college for people who devote a year or two of full-time public service to our country.
Get Rid of the Red Tape in Financial Aid. The FAFSA (Free Application for Federal Student Aid) is longer and more complicated than the typical tax return. The 1040EZ has one-third of the FAFSA's questions and one fifth of its pages. All told, Americans spend 100 million hours filling out financial aid forms – the equivalent of 55,000 full-time jobs. Furthermore, once a person has completed the FAFSA, they still don't know how much aid they will receive or what they will be expected to pay. That information does not arrive until late spring, leaving very little time for families to figure out whether they can cover the cost. The complicated forms and lengthy procedures are not necessary. The federal government already has the vast majority of the information it asks for on the FAFSA, and the additional information requested on the FAFSA does not in most cases substantially alter the award. Hillary is proposing to eliminate this burdensome process, which turns students off from applying to college. Hillary will allow people to apply for financial aid by checking a box on their income tax return. Upon checking that box, they will receive a letter from the Department of Education with a coupon showing the amount of federal aid – grants and loans – to which they are entitled. They will then include their eligibility information on their college applications, and the schools will reach out directly to the Department of Education to collect the funds. This new system will be much simpler and, according to one estimate, will increase the college-going rate by 5-7 percent.[ix] Taxpayer privacy will be fully protected and the Department of Education will only have access to the financial data that it already collects on its financial aid forms.
Hold College Costs Down and Hold Colleges Accountable for Results. Students and their families should be able to make educated decisions about where to spend their money. That is why Hillary will create:
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- A new online Higher Education Cost Calculator. This calculator will provide an estimate of the amount of aid (from all sources – federal, state, local and the institution), a student is likely to receive. Under this proposal, colleges and universities will submit information about a typical range of low to high income students and their financial aid in their freshman and sophomore years to the Department of Education. The Department of Education will use it to develop a cost calculator, which students and families would be able to access online to find out roughly how much they should expect to owe out of pocket in their first and second years, if they chose to attend that institution.
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- A College Graduation and Employment Rate Index. Hillary will also ensure that the Department of Education makes available information about the outcomes produced by all colleges and universities, including the four- year and six-year graduation rates and the percent of the senior class that is employed upon graduation or enrolled in further education, including information on earnings and field of employment."
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- Truth in Tuition Disclosure. As a condition of federal financial aid eligibility, state and local institutions of higher education will be required to set multi-year tuition and fee levels for each cohort of students at the beginning of each student's freshman year, so students and families will have a sense of how much their costs will be in the coming years.
Challenge Selective Colleges to Expand Access for Students from Low-Income Communities. Many of the most selective colleges and universities in the country have been real leaders in the fight to expand access to low-income students and students of color. For example, Harvard has eliminated tuition for all students from families earning less than $60,000. But there is still a lot of work to be done. Only 7% of Harvard's undergraduate population is eligible for Pell Grants.[x] Hillary is challenging some of the most selective schools in the U.S. to further expand access for low-income and minority students by spending a greater percentage of their endowment annually on recruiting more low-income students and students of color, supporting them so that they graduate and growing the pipeline of students that are prepared to compete for admission to the most selective schools. The endowments of the 12 wealthiest universities total $155 billion and in recent years and have gotten tax-free returns of almost 20%. These elite institutions benefit tremendously from their tax-exempt status as well as from federal student financial aid and research grants.
These proposals build on Hillary's work in the Senate:
A Public Service Academy – Hillary has proposed legislation to create The United States Public Service Academy to tap into the renewed sense of patriotism and civic obligation among our young people. This academy will be like the West Point of public service, cultivating future leaders in the fields of education, government, public health, environmental conservation, and more by instilling in them leadership skills for the public sector.
A New GI Bill – Hillary has proposed a new GI Bill of Rights for the 21st Century. This bill would provide the full cost of tuition and fees, and a living allowance for 36 months of schooling for those who enlist for four years of active duty military service. Right now, the Montgomery GI Bill (MGIB) pays less than two-thirds of the average cost of attending a four-year public college. This legislation would also increase the basic benefit for those currently in the MGIB or who serve less than four years to $1,300 per month, and eliminate the current reduction in their basic pay to get the educational benefits.
Student Borrower's Bill of Rights. Hillary has proposed this legislation to make it easier for students to repay loans and give them a basic set of enforceable rights. It would give student borrowers the right to fair monthly payments that do not exceed a percentage of their incomes, as well as access to fair interest rates and fees. The bill would also give students the right to shop in a free marketplace for their lender and to borrow without exploitation. Finally, the bill will give students access to better information about their loans to provide students with better options during repayment.
Non-Traditional Student Success Act. This bill is aimed at expanding access to college for working adults, those who go back to school later in life, and first generation college students. This legislation increases the maximum Pell Grant. It also creates a pilot program to allow students attending college less than half-time to receive federal student aid. It increases the income protection allowance to allow working students to keep more of their income without losing crucial student aid. And it expands the Lifetime Learning Credit from 20 to 50% and allows students to receive the money in advance – when they need it to pay tuition.
Cost: The new college tax credit and other initiatives in this agenda will cost approximately $8 billion per year. These costs will be financed without increasing the deficit by eliminating the guaranteed student loan program and allocating a portion of the savings from freezing the estate tax at $7 million per couple rather than allowing it to be completely repealed. Freezing the estate tax at $7 million per couple will have no effect on 99.7% of estates. It will mean instead that the 10,000 wealthiest estates in the U.S. do not receive a further tax cut.
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[i] Dynarski, Susan and Judith Scott-Clayton, "College Grants on a Postcard: A Proposal for Simple and Predictable Student Aid," (2007) http://www3.brookings.edu/views/papers/200702dynarski-scott-clayton.pdf
[ii] Block, Sandra, "Rising Costs Make Climb to Higher Education Steeper", USA Today (1/12/2007), http://www.usatoday.com/money/perfi/college/2007-01-12-college-tuition-u...
[iii] Pope, Justin, "College tuition and fees up more than 6% at four-year public schools," (10/24/06), USA Today
[iv] College Board, "2006 Trends in Higher Education Series: Student Debt Students Relying More Heavily on Private Lenders"
[v] American Council on Education, "2007 Status Report on the Pell Grant Program", http://www.acenet.edu/AM/Template.cfm?Section=Home&TEMPLATE=/CM/ContentD...
[vi] Carey, Kevin, "America's Best Community Colleges, " Washington Monthly 2007, http://www2.washingtonmonthly.com/features/2007/0709.careyessay.html
[vii] American College Testing Program, "Colleges Striving to Retain New Students", 2004, http://www.act.org/path/policy/alert/retain.html
[viii] Working For America Institute (2007). http://www.workingforamerica.org/toolkit/case_study4a.asp
[ix] Dynarski, Susan and Judith Scott-Clayton, "College Grants on a Postcard: A Proposal for Simple and Predictable Student Aid," (2007), http://www3.brookings.edu/views/papers/200702dynarski-scott-clayton.pdf
[x] Marklein, Mary Beth, "The wealth gap on campus: Low-income students scarce at elite colleges", USA Today (09/20/2004), http://www.usatoday.com/educate/college/education/articles/20040926.htm
