This week, Democratic presidential candidate Hillary Clinton announced major new additions to her plan to provide debt-free public college and reduce the burden of student debt for those struggling to repay. Clinton’s plan would eliminate tuition and fees for working- and middle-class students, which combined with expanded Pell Grants will allow millions of students to graduate with no debt.
If enacted, this plan would return the U.S. to a system where students could work their way through school again, and it represents a major shift back to the notion of higher education as a public good. By expanding Pell Grants, making community college tuition-free for all and eliminating tuition for the majority of students at public four-year colleges, as well as making major new investments in private HBCUs and Minority Serving Institutions, this plan shows the most promise for working class students and students of color, who Demos has shown borrow more often, and in greater amounts, for a degree, and are at the greatest risk of struggling to repay student debt.
Demos also released a new report today looking at the other side of the coin, examining who currently graduates with a four-year public college degree while avoiding student loan debt.
In “A Leg Up: How a Privileged Minority is Graduating Without Debt,” Demos senior policy analyst Mark Huelsman explores the factors that differentiate debt-free from indebted graduates. These include race, family wealth, financial aid and public benefits, card debt, student work, and whether students begin at community colleges.
“The minority of students fortunate enough to graduate from public colleges without debt are doing so due to some built-in privileges,” Huelsman suggests. “These are students who come from greater means, have higher support from parents, and do not need to work long hours or take on more credit card debt in order to make ends meet in school.”
Key findings include:
• Black students are considerably more likely to graduate with debt. Among dependent students, only four percent of students who graduate without debt are Black, while 12 percent of students who graduate with debt are Black.
• Debt-free graduates come from significantly wealthier families. The median family income for students who graduate debt-free is $96,287 and the median family income for students who graduate with debt is 28 percent lower at $69,257.
• Debt-free students are more likely to be dependent students, and thus more likely to receive help from family in paying for college. The vast majority (65.4%) of students who graduate without debt are dependent, while independent students and student parents make up higher percentages of indebted graduates.
• Credit card debt isn’t replacing student debt, it’s adding to it. Students who graduate with and without debt carry credit card debt at almost exactly equal rates, regardless of whether they are dependent or independent students. However, students who graduate with debt carry over a credit balance each month at higher rates than students who graduate without debt.
• Attending a community college before going to a public university makes no difference in whether or not students graduate debt-free, despite the fact that community college is often significantly cheaper. Among both independent and dependent students, those who graduated with debt and without debt attended community college at near identical rates.
It is abundantly clear that students who graduate without debt enjoy many benefits that less fortunate students do not. Federal and state programs which are meant to level the playing field have also not succeeded in giving low-income and minority students the tools they need to graduate public universities with little to no debt.
However, these are problems which can be fixed. While Pell Grants used to cover the overwhelming majority of college costs, low-income students today can only rely on them to cover around one-third of the cost of attendance. The ideal solution would be to index Pell Grants to the cost of college in order to ensure that grant aid would actually make a difference to students in reducing unmet need. Public Historically Black Colleges (HBCUs) and minority serving institutions have also experienced a dearth of funding in recent years which has disproportionately affected black and minority students. Increasing state and federal funding for those schools would help lower the undue burden experienced by black families in obtaining a bachelor’s degree. Lastly, students who come from families which receive means-tested public benefits should have all financial barriers removed from attending public colleges.
Huelsman concludes, “a return to debt-free college is imperative, not just because it would boost access and attainment, but because our current system is inequitable.” Public education must not be allowed to become a resource only attainable by the wealthy and privileged.