Hillary Clinton

Hillary Clinton's Dangerous Student Loan Rhetoric

Bill Clinton offered a tradeoff, while Hillary Clinton may be offering a handout.

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Hillary Clinton's big campaign rally over the weekend offered a hint of how she's going to handle a trillion-dollar question—what to do about demands by Senator Elizabeth Warren and the remnants of the "Occupy" movement for forgiveness of student loan debt.

"I believe that success isn't measured by how much the wealthiest Americans have, but by…how many young people go to college without drowning in debt," Clinton said.

In case anyone missed the point, she returned to it later in her speech. "Let's make college affordable and available to all …and lift the crushing burden of student debt," she said.

Clinton will release detailed plans about student loans "in mid-July," Politico's Annie Karni reported, making it one of the earliest policy rollouts of her campaign.

If a Clinton presidential campaign focused on college affordability sounds familiar, it should, at least if you are older than 40. Clinton's remarks over the weekend sent me looking back through online archives to find an article I wrote in January 1993 about the popularity of then-president-elect Bill Clinton's campaign promise of a "domestic G.I. Bill." The 1992 Democratic Party platform promised to "enable all Americans to borrow money for college, so long as they are willing to pay it back as a percentage of their income over time or through national service addressing unmet community needs."

So it will be illuminating to watch for the details of Clinton's student loan program. Back in 1992, Bill Clinton was for income-based student loan repayment, or for loan forgiveness in exchange for national service. If Hillary Clinton comes out in favor of a more generous plan—say, loan forgiveness or modification based on no repayment or without any national service—it says something about how the Democratic Party has moved to the left over the past 23 years, or about the ideological differences between the more centrist Bill Clinton and his more left-of-center spouse. In Kennedy-esque terms, Bill Clinton was asking what you can do for your country, while Hillary Clinton may be offering what your country can do for you. Bill Clinton was offering a tradeoff, while Hillary Clinton may be offering a handout.

For an advance look at what Hillary Clinton may have in mind, check out Senator Elizabeth Warren's recent speech to the American Federation of Teachers. Professor Warren, a Democrat of Massachusetts, nods in the direction of bipartisanship, acknowledging Republican concerns about federal dollars subsidizing campus amenities like "fancy dorms, high-end student centers, climbing walls and lazy rivers," along with "exploding numbers of administrators."

Said Warren, "Conservatives are right: we can't keep pouring money into schools without demanding something in return." She mentioned an idea backed by Senator Alexander, Republican of Tennessee, and "conservatives at the American Enterprise Institute," to leave colleges, rather than taxpayers, on the hook when a student defaults on a loan.

There's real money involved. "With $1.3 trillion in outstanding student loan debt, our kids and our economy can't wait. Borrowers dealing with student loan debt need relief now," Warren said.

Get past the bipartisan window-dressing, though, and the key provision is this, in Warren's words: "students who are crushed by student loan debt need better protection. When they've fallen off a financial cliff, they should be able to discharge debts in bankruptcy. When their schools break the law and defraud them, students should also be released from their student loans."

There you have it. The Democrats have gone from Bill Clinton's encouragement of loan repayment or national service to Elizabeth Warren's encouragement of bankruptcy and indebted students declaring themselves as fraud victims.

None of this is to say that college affordability isn't an issue. But where's the justice in telling parents who sacrifice to save for college, or students who finance their studies with ROTC scholarships, that families who make less prudent choices will get a free ride? And what will federal loan forgiveness do to the incentives of entrepreneurs who are trying to use technology to reduce the cost of higher education?

Hillary Clinton is counting on nostalgia for Bill Clinton's presidency to help boost her own candidacy. But the student loan issue is an early warning that the inevitable comparisons between her and him may not always be flattering to her. (Free trade, where Bill Clinton had a fine legacy but Hillary Clinton has waffled, is another.) Before Clinton gets into any debates with Republicans, she'll have to reckon with the formidable policy record of her own husband.

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40 responses to “Hillary Clinton's Dangerous Student Loan Rhetoric

  1. I believe in equality. Equality for everyone. No matter how stupid they are, or how much better I am than they are.

    /stevemartin

  2. “where’s the just in telling parents who sacrifice to save for college, or students who finance their studies with ROTC scholarships, that families who make less prudent choices will get a free ride?”

    Who needs “justice” for this? That sounds to me like a clear lesson in how shit works. This is how you are officially put on notice that you will be expected to support those who make the less prudent choices.

    1. * “where’s the justice…”

  3. Putting a question out there:

    Most people argue that it’s “my tax money” when arguing against discharging student loans. That’s more an argument for government not being in the business of making student loans and student loans being given special treatment by the bankruptcy code. What about loans taken from private entities? Why should a loan taken from BofA for educational purposes be treated differently than a loan taken from BofA for any other reason? I can may my BofA credit card and go to the race track. If I have a bad day, I can discharge the unsecured credit card debt and in a couple of years my credit will be repaired and I’ll go on with life… perhaps to do it again.

    1. * I can max out my …

    2. Credit card debt is getting tougher and tougher to discharge. It used to just get wiped out if you filed bankruptcy. That’s not the case anymore.

  4. “Let’s make college affordable and available to all ?and lift the crushing burden of student debt,” she said.

    How about lifting the crushing burden of supporting 60 million free loaders with my taxes?

    1. The federal student loan program is profitable enough to be self-financing: http://www.slate.com/articles/…..dents.html You can argue that the government should leave the student loan business to private industry on general free market principles, but the argument that it costs you anything in the way of measurable additional taxes is bullshit.

      1. You don’t seem to understand that Slate is a troll site, and whatever the government is willing to disclose that a given program is costing, you can safely bet you’re missing half the story.

  5. But that’s too Patriarchial – the Our Father says “forgive us our debts as we forgive our debtors”.

  6. Easy student loans encourages them to attend schools which they otherwise could not afford. Prices would come down if more people said “FU, it’s too much!”

    1. More to the point, easy student loans encourage colleges to raise their prices to soak up all that extra money.

      1. Yep. The school one of my friends attended for her master’s had tuition that just so happened to be almost exactly the same as the maximum for federal student loans.

  7. “When their schools break the law and defraud them, students should also be released from their student loans.” -Fauxcahontas 2015

    The rich part about this is that she was a professor at Harvard. Is she implying that schools (perhaps even her own previous employer) might be defrauding students?

    She will sell you the poison and the antidote! LOL

    1. Even if students were the victims of fraud, I wasn’t aware that it was the taxpayer’s responsibility to compensate victims of fraud for their losses.

  8. Listen, this entire country runs on borrowing money and never paying it back.

    How else are we supposed to grow the economy without going into massive amounts of debt, and then skipping out on the bill when it’s due?

  9. In progressive communist land everything is free but paid for by someone else.

  10. A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.

  11. “I believe that success isn’t measured by how much the wealthiest Americans have, but by?how many young people go to college without drowning in debt”

    Success is measured by how much money is extracted from tax payers and pumped into the monasteries of the Progressive Theocracy.

    And that is how they measure success.

  12. I believe that success isn’t measured by how much the wealthiest Americans have, but by?how many young people go to college without drowning in debt,

    What Hillary is saying is that out of work Yale art history majors need to be supported by the tax paying blue collar workers of America!

  13. Respectfully, your interpretation of Sen. Warren’s words is off base. You claim that she is encouraging students to “declare themselves as fraud victims.” Warren is not calling for the establishment of a new right for students to unilaterally determine that they are fraud victims and therefore that they can escape their student loans; she is saying that where a school has been determined by the legal process (whether through a civil suit or a criminal prosecution) to have a defrauded students, students should have recourse in the form of not being required to repay the debts that they were defrauded into incurring. This seems like a non-controversial point, except to the extent that you believe that the centuries-old law of fraud is wrong. Even the most doctrinaire libertarians and classical liberals generally recognize the limited function of government to guard against force and fraud.

    Similarly, your criticism of her encouraging students to file for bankruptcy is misdirected. The bankruptcy system is emphatically not a “hand-out.” Obtaining relief under the Bankruptcy Code is an arduous process that requires full disclosure of one’s financial affairs to the bankruptcy court and trustee, the liquidation of non-exempt property to pay creditors, and an opportunity for any affected parties to object to the discharge of debts. It’s not a matter of pushing a button and making your debts go away.

    1. Those would be fun test cases.

    2. students should have recourse in the form of not being required to repay the debts that they were defrauded into incurring

      Why not? If you take out a loan from a bank, spend it on something, and that turns out to have been a fraud, why should you not have to repay your loan? The people lending you the money didn’t defraud you.

      This seems like a non-controversial point, except to the extent that you believe that the centuries-old law of fraud is wrong. Even the most doctrinaire libertarians and classical liberals generally recognize the limited function of government to guard against force and fraud.

      “Guard against” in that the perpetrators of fault can be dragged into court and sued. Not “guard against” in the sense that tax payers will pay you back what you lost, and that’s what you are demanding here.

      The bankruptcy system is emphatically not a “hand-out.”

      The bankruptcy system, however, assumes that lenders can exercise some responsibility when they make their loans, so that it’s their fault when the loan doesn’t get repaid. Since this doesn’t happen for student loans, it is difficult to see why they should be dischargeable this way.

      1. On your first two points, the problem with your example that here the lender is usually the federal government, not a bank. It’s the DOE that accredits schools such that they are qualified to partcipate in the Stafford, Grad Plus, and other federal loan systems. If you want to say that the federal government shouldn’t be in the business of lending directly to students, I completely agree with you. But that’s a different point.

        On your third point, I’m not quite sure what you are saying. If you mean that, usually, lenders can assess the risk of the loan they are making by charging a higher interest rate or lending less, then (1) that does happen with private student loans, so it’s not clear why they should get special treatment compared with other unsecured debts (e.g. credit cards), and (2) I agree that that does NOT happen with federal loans, since everyone is charged the same interest rate regardless of whether they are studying to be a doctor or an underwater basket weaver, and that is a big problem. But the answer to that is to change the system and get the federal government out of lending, not to help support this idiotic system by letting the federal government off the hook for indiscriminately lending our money with no regard for likelihood of repayment.

    3. The bankruptcy system also has the ability to force the sale of the bankrupt’s assets to repay creditors.

      What does an mostly unused liberal arts degree sell for in a liquidation?

      1. Something tells me that, in a more market-based system, a loan to get a liberal arts degree might be hard to come by.

        They don’t want a bettering student loan system. They want free education in whatever subject they choose.

        1. Ph.Ds in puppetry are a human right!!

          /prog

      2. I’ve heard that while Germany covers higher education cost, students not only need to pick an academic path that is likely to translate into a paying job, but also demonstrate the aptitude required to handle it. Anyone care to enable my laziness in not verifying before I post?

        1. As I remember from German class in high school. The school system is set up where by the end of their 5th/6th grade equivalent, your ability to even go to college is set. You get shuffled into one of three education paths and if you don’t get into the college path then you have almost no chance of getting into college and are instead outfitted for trades. Which must kinda suck if you are a late bloomer in education.

  14. As to her husband’s record, I think that’s all that’s keeping Hillary in decent position at this point in the race. A substantial segment of her support must come from people who are for her election only because they think Bill will be the one pulling the strings when she’s in office. They may even be right.

    Remember when Bill ran, she said if you elect him, you’re getting me too. Remember how badly that went w Hillarycare. Many people surely trust that the Clintons will remember that & make sure Bill makes all the major decisions.

  15. Calling Janet Yellen, calling Janet Yellen. Toxic assets in aisle 5. Bring the QE cart, stat!

    1. No shit…I can already picture the spectacle of Krugman and every leftoid economic idiot going on tv and telling us how monetizing new debt in order to purchase old student loan debt is such a genius investment for the state to make.

  16. Elizabeth Warren’s encouragement of bankruptcy and indebted students declaring themselves as fraud victims.

    “You cannot con an honest man”- R.A. Heinlein

  17. I agree the cost for a 4 year degree is crazy. BUT,…If you are smart enough to get into College you should be albe to do the math on the loans you are taking out to get there. Just sayin

    1. Some students are probably smart (but immoral) and are banking on the government bailing them out of their student debt.

      Others are most likely of the “how does it make you feel?” and “no wrong answers” schools of thought, so rational calculations like that are beyond them. These would be the Women’s Studies majors.

  18. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.netcash5.com

  19. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.netcash5.com

  20. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.netcash5.com

  21. One more game between politicians. So, they say they can pour money into schools without demanding something in return, and what about the quality of education? Have the politicians thought why so many students start online dissertation writing and turn to experienced academic writers? Do you think that are lazy or unintelligent? You are wrong. Schools and colleges suffer from creative and talented staff, equipment and better education system. There are many education questions to ask the government. It seems that they don’t consult specialists when it comes to reforms and use students’ needs as the instrument, nothing more. While the politicians play their games, students need help with educational issues.

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