WASHINGTON--(BUSINESS WIRE)--After reading Hillary Clinton’s student loan plan, the fiscal policy staff at the Council for Citizens Against Government Waste (CCAGW) has given her a failing grade. While the class assignment was to write a proposal that would reform the student loan program, reduce the burden of student loans, and cut the cost of higher education, Mrs. Clinton’s financially outlandish plan would exacerbate the problem by dumping $350 billion into an already bloated system.
The Clinton plan would hand out federal tax dollars to states in exchange for “no loan” tuition at four-year universities and make two-year community colleges free. The money would come from the same source as every one of Mrs. Clinton’s new spending programs: Higher taxes on the allegedly wealthiest Americans.
According to the Federal Reserve Bank of New York, student loan debt hit an all-time high of $1.16 trillion in 2014, marking a $77 billion increase from the previous year. Upon graduating with a bachelor’s degree, the average student will owe more than $35,000 in debt, more than double the amount they owed in the early 1990s. Over the past decade, there has been a 69 percent increase in students borrowing from federal loan programs, while the federal government now provides about 71 percent of all student aid funds. More than 43 million Americans owe money on student loans.
Making more loans available at a lower cost has been a root cause of increased student debt. Tuition costs have risen by 153 percent over the last three decades for private universities and 231 percent for public universities, which is greater than price increases for food and healthcare. Increased federal subsidies for college artificially inflates the purchasing power of students, which allows universities to raise tuition and increase the demand for more subsidies. That is why the New York Fed also found that “on average, for a $1 increase in the subsidized-loan cap, tuitions rose by as much as 65 cents.” Mrs. Clinton also wants to expand AmeriCorps from 75,000 to 250,000 members and increase their education benefits.
CCAGW President Tom Schatz said, “Higher education costs are the result of a vicious financial cycle. Pumping more money into the system without reforms that could help mitigate and lower costs will only make the problem worse. The Clinton plan is not based in fiscal reality. Like many other proposals that she is touting on the campaign trail, it is designed to lure voters to the polls rather than solve the real issue.”
The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, the nation’s largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.