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Clinton's sweeping new debt-free college plan

Hillary Clinton wants to spend $350 billion to make college more affordable -- will Congress let her?

MANCHESTER, New Hampshire -- In response to rising student debt burdens and the need to entice young voters, Hillary Clinton on Monday will propose a $350 billion student debt reform plan that aims to make college accessible to Americans without loans.

Student loan debt has exploded in recent years to $1.2 trillion -- more than Americans hold in credit card debt or car loans. Per-student loan debt has nearly doubled from just a decade ago, even as many more students take out loans.

It’s one of the issues Clinton hears about most on the campaign trail. And at a campaign event in New Hampshire Monday, the former secretary of state will unveil sweeping proposed reforms.

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Clinton’s so-called “New College Compact,” detailed in three fact sheets shared with reporters, is the most detailed and expensive plan she has unveiled so far on her 2016 presidential campaign. “Students will be able to attend an in-state public university to get a 4-year degree without ever having to take out a loan for tuition,” one fact sheet claims.

While the tax hilke and other issues would likely run into opposition in Congress, Clinton’s campaign wants to cast a marker with the plan. Politically, the effort could energize young voters, who were critical to President Obama’s victory over Clinton in the 2008 primary and then to both his general election wins.

Adam Green, the co-founder of the Progressive Change Campaign Committee, which has been one of the groups leading the effort for debt-free college, praised the plan. "Hillary Clinton's plan is very big and ambitious -- leading to debt-free college and increased economic opportunity for millions of Americans,” said Green, who has sometimes been critical of Clinton in the past.

“The center of gravity on higher education has shifted from tinkering with interest rates to making college debt free -- and Clinton's bold proposal is emblematic of the rising economic populist tide in American politics,” he added.

By closing undisclosed tax loopholes on the wealthy, Clinton plans to raise $350 billion over 10 years to invest in higher education. Of that, more than half would be used for grants to states, public universities, and non-profit colleges that keep costs low for students and meet several other requirements.

Another third of the money would go towards debt relief for students. Clinton's plan would allow every American who owes money to the government to refinance their loans at today’s historically low interest rate. And she’d cut future borrowing costs by preventing the government from making a profit on loans to students.

The remainder of the money would fund innovative education models.

Clinton would also expand and streamline income-based repayment options, so borrowers would never have to pay more than 10% of their income. After 20 years, their remaining debt would be automatically forgiven if they kept up with payments. Pell Grants would help pay for living expenses beyond tuition.

Student borrowers would be expected to work at least 10 hours a week to contribute, while their families would continue contributing under the current income-based model. Clinton’s plan would also expand a tax credit from $1,000 to $2,500 for families paying for college.

And to protect borrowers, her campaign says she would create a Borrower Bill of Rights and task the Elizabeth Warren-created Consumer Finance Protection Bureau with monitoring loans.

Clinton’s plan also cracks down on for-profit colleges in a number of ways, including by eliminating the so-called 90-10 loophole, which leads many for-profit college to prey on veterans.

The plan she will release Monday also includes a number of issues not directly related to loan debt. Her campaign says she will create a dedicated fund for Historically Black Colleges and Universities, and will expand AmeriCorps from 75,000 to 250,000 members.

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Both of Clinton’s main Democratic challengers have put forward their own college debt reform plans.

Bernie Sanders has called for eliminating tuition at all public colleges and universities, for a total cost of $750 billion over a decade. Some on the left have said his plan doesn’t quite go far enough because it doesn’t support non-tuition costs.

Former Maryland Gov. Martin O’Malley, meanwhile, has proposed making in-state education debt-free for all Americans, and would expand non-tuition cost support.  

Politicians have to deal with the issue, said Mark Huelsman, a senior policy fellow at Demos, the New York-based liberal think tank that has been the intellectual driving force behind the idea of debt-free college.

“The benchmark for us has always been that any plan provides a pathway to debt free college or a pathway for a majority of students to graduate without taking on debt. That's been a galvanizing issue for progressives,” he said. “Unfortunately, voters are responding to their pocketbooks. We like to point out that student debt was not the norm for most students until the 1990s, really. If you wanted a bachelor's degree for most of our history, you didn't have to take on debt to do so. Now it's basically a requirement. And with college becoming more important in the labor market, not less, there's a lot of anxiety about it.”