Increasing tuition costs are largely held to be at fault for rising levels of debt. However, the cause of rising tuition is subject to debate. Some believe that public subsidies have encouraged colleges to avail themselves of the “free money” and jack up tuition prices. Others say it is the competition among institutions to build the most expensive and cutting-edge amenities on campus.
In FY 2014, per-student state appropriations for higher education were 24 percent below the funding level in 1989. The result, also shown in the chart, is that net tuition revenue (the tuition received by public colleges and universities after grant aid is subtracted) has more than doubled during this period. Considering that three-quarters of all undergraduates are enrolled in public institutions, it’s not surprising that this increase in tuition prices has led to a large increase in student loan borrowing.
The general idea is that students who attend a four-year public college would have their tuition and debt reduced almost to zero through a combination of moves. The federal government would increase its aid to states for higher education, so schools could bring down tuition. Pell Grants would be increased for low-income students, and with lower tuition this money could be spent by students on costs like books.
Simply put, debt-free college means that every student in America, regardless of their financial means, should be able to attend a public college or university and graduate without student debt.
In weekly calls and in meetings over the past few months, Hillary Clinton’s policy team has been soliciting input from policy experts with ties to Sen. Elizabeth Warren, with the goal of making student loan reform the core of Clinton’s economic agenda.
Nationally, the data demonstrates a vicious cycle of debt eroding future wealth creation, which can lead to more debt for future generations. According to a report by the think tank Demos, the effects of exorbitant student debt can linger long after college, with the average debt burden potentially costing grads more than $200,000 of lifetime earnings.
The progressive think tank Demos, which has been a leading voice in the progressive policy conversation and, according to Politico, has been consulted by Clinton's team, has laid out some ideas that could influence the agenda that Clinton unveils.
The most specific plan for debt-free college so far comes from Demos, a progressive think tank. It defines a "debt-free" degree as a degree students could pay for by working 10 hours per week at minimum wage while enrolled in college. That means students' cost of attendance not covered by grants and scholarships, including books, tuition, and living expenses, couldn't exceed about $2,500 per year.
Demos calls for the federal government to help states shoulder the cost of higher education.
The push for debt-free college began last September, when Demos, a liberal think tank, issued a plan that would make college debt-free for low- and middle-income families in some states, at a cost of around $30 billion. Four months later the Progressive Change Campaign Committee, or PCCC, began a campaign to press the Democratic candidates to back the idea.
Some community-college students don't get support from their families, while others had subpar high-school educations and have to play catch-up right away. In fact, a 2010 study by the public-policy organization Demos found that six out of 10 students entering community colleges have to take remedial courses to compensate for the skills and knowledge they never attained in high school.
