The Secret Boldness of Hillary’s College Loan Plan

How horrible and politically inept of her, I thought, when I read this Salon headline:

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Then I read the subhead and realized that this was a case of seeing the world through reality-distorting Bernie Goggles: “Hillary’s “Initiative on Technology & Innovation” reflects her Reaganite, neoliberal, technocratic worldview.” The article explains that while she has pledged to “help forgive the student loans of entrepreneurs and small business owners” (wrong: she defers them) “yet has not made similar promises to help forgive the student debt of average workers.” (Very wrong.)

The Hillary campaign is sitting on a very dramatic proposal without seeming to realize it. It’s staring right up at us from the 8th paragraph of their “fact sheet” on student debt (which is accessible through the 19th paragraph of their college affordability sheet, which is can be found through the ‘learn more’ link in the 18th paragraph of their issues page.)

Specifically:

“Consolidate the four income-based repayment programs into a single program with the same rules for everyone: Every student borrower will know they can enroll in a program where they never have to pay more than 10 percent of income, with college debt forgiven after 20 years so that those who consistently make payments can move on in their lives.”

So in fact, those who still have debt – i.e. the ‘average workers’ as Salon puts it – would have their debt wiped out. In dollar terms, that debt forgiveness would almost certainly be much larger than that imagined in the entrepreneurship plan.

In fact, it’s down-right “democratic socialist” in its implications: people who have not earned much money get a big chunk of debt wiped out. When Bill Clinton first proposed a similar idea in 1992 it was ostensibly to help people follow low-paying public service careers, as teachers or social workers.

But the bigger impact could be to provide a massive subsidy to those who have had disappointing income thanks to global economic disruptions. The proposal does not attempt to sort through the reasons why you might not be earning much; it just makes the revolutionary claim that if, after 20 years, you’re not earning much, you should get the rest of your loan wiped out.

Let’s take someone who graduates with $30,000 in debt and earns an average salary over the next 20 years of $30,000. The plan doesn’t give details about how this would be implemented but a rough approximation might be: they’d pay roughly an average of $1,000 a year, which would mean at least $10,000 unpaid after 20 years. And – poof – that debt would be wiped out. This is a significant income redistribution from high earners to lower earners with large debts.

It’s not quite as big as free college for everyone but it’s quite dramatic, quite 99-percenty, and quite practical. Sometimes incrementalism moves in large increments. Now if only Hillary can get people to read the eighth paragraph of the second issue sheet on the bottom half of her issues section.

Steven Waldman

Steven Waldman is founder of LifePosts.com, a platform for online memorials and life milestones. He's a Washington Monthly contributing editor, journalist and author.