It didn’t get much attention in a policy-packed speech, but Bill Clinton’s address in Charlotte included this important section:
[A]fter a decade in which exploding college costs have increased the drop-out rate so much that we’ve fallen to 16th in the world in the percentage of our young adults with college degrees, his student loan reform lowers the cost of federal student loans and even more important, gives students the right to repay the loans as a fixed percentage of their incomes for up to 20 years. That means no one will have to drop-out of college for fear they can’t repay their debt, and no one will have to turn down a job, as a teacher, a police officer or a small town doctor because it doesn’t pay enough to make the debt payments. This will change the future for young Americans.
As Stephen Burd notes in his article on student loan indebtedness and the abuses associated with collecting payments in the September/October issue of the Washington Monthly, income-contingent loans were a regular campaign trail topic for Bill Clinton in 1992, and he succeeded in making this an optional feature of the student loan system. But opposition from banks and other powerful lobbies kept this initiative small and poorly marketed, so it’s noteworthy that Obama is trying to give it another push.
The timing couldn’t be better. Aside from Burd’s harrowing tales of people struggling to get along being harassed by student loan debt collectors, the New York Times recently ran a front-page story by Andrew Martin on the industry that has grown up around the federal government’s unforgiving rules on student loan delinquency. It’s time for a different approach, and both Clinton and Obama have the right idea.