No Student Loans: Dream or Future Reality?

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No Student Loans: Dream or Future Reality?

On Monday, Democratic presidential candidate Hillary Clinton released her plan to combat the ever-rising cost of a college education in the United States. Clinton's proposal, which her campaign is calling the New College Compact, aims to make college entirely debt-free for students at public universities.

How does it work?

Clinton's plan starts with a basic premise: No student at a public university should have to take out loans to pay tuition. Here's how it might work:

  • The federal government would contribute $175 billion in grants to states that guarantee that public university students won't have to take out loans to pay for tuition.
  • States would be required to end higher education-related budget cuts, slow the growth of tuition fees and cut costs like high salaries for administrators.
  • Parents would be expected to make a "realistic" contribution to their children's tuition and each student would be expected to work 10 hours per week to contribute to their costs.

Clinton also intends to allow those already saddled with debt to refinance at lower rates, and promises that the federal government won't profit off student loans anymore. She also wants to follow through with President Obama's plan to make community college entirely tuition-free.

Why does the student loan system need change?

Student debt in the United States is skyrocketing. The class of 2015 graduated with the most student debt in U.S history, at an average of over $35,000 per student. Student loans are not only bigger but also far more common--around 70 percent of graduates had loans in 2015, compared to just 46 percent in 1993.

In total, TransUnion data shows that student debt has doubled since 2010, and now sits at almost $1.2 trillion.

The explosion of debt is well-reflected among Credit Karma members, too. Around 39 percent of Credit Karma members between the ages of 21 and 29 have open student loans (loans you still owe money on), compared to 27 percent of all of our members. Those debts stick around, too: 30 percent of Credit Karma members between age 30 and 44 also have open student loans*.

The cause of the huge increase in student loan debt is straightforward: College is far more expensive now than it has been in the past. In the last 15 years, the average cost of a four-year private nonprofit education has risen from $22,179 to $31,231. For public universities, the cost has risen 90 percent, from $4,805 to $9,139.

So what now?

Hillary Clinton isn't the only one talking mounting student debt --other presidential candidates, politicians and activists have weighed in with their own plans. As we enter a new election cycle and student debt totals continue to rise, you can expect this to be a big issue going forward.

Though it would introduce new refinancing options for public loans, Clinton's plan wouldn't wipe out any debt students have racked up in the past. If you're in that boat, you might want to do some research and see if you could save some money by refinancing or consolidating your loans.

If you have a public loan, you may have more repayment options, such as increasing your loan term in exchange for lower monthly payments.If you have a private loan or if you want to refinance a public loan, you can also look into private lenders. Use Credit Karma to compare your options and help scope out the right deal for you.

If you're still in school or looking to go back in the future, you might be thinking that debt-free college education can't come soon enough. In the meantime, though, make sure to investigate before you rush into any sort of commitment. As our numbers show, student debt is a financial burden that can stay around for years, so it's best to arm yourself with as much information as possible.

*Based on the latest available credit report information of over 40 million Credit Karma members.

About the Author: Mike Goldstein is a Content Writer at Credit Karma. Since joining the team in June 2013, he's been delivering the financial know-how on the daily. When away from work, you can find Mike watching hockey, Twittering for hours and frequenting trivia nights.

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I'd vote for this plan outlined by Hillary. The highlights are $175B in subsidies to *public* universities, states would have to continue funding the universities rather than cut it, and having students work to cover costs.  Wow, 30% of credit karma members between 30 and 44 have existing loans. Good plan to help reduce loans for future students.

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Thanks for posting! We appreciate you taking the time to share your thoughts. 

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It figures you'd vote for someone offering something that is only a thought, and would never be allowed to happen. You MUST get informed as to what happens, and who controls Washington DC. It's not the like of this criminal.

There has been seceral attempts by several House and Senate Members to allow Student Loans to be restructured and refinanced. Every single time, all have been sidelined or never made it to committee for a vote. Stop beleiving everything you hear. That's hat's wrong with the nation.

Try investigating this little tid bit:

Last year 2014, a BIll was presented to the House which would have allowed ALL past due Student Loans, along with ALL defaulted Student Loans to be refinanced at .075% (3/4 of a percent!). That Bill was stonewalled and killed by Minnesota (R) House Member John Kline who refused to allow the BIll to be voted on in the House in order for it to make it to the floor, and then on ot the Senate for approval. Yet, that same scumbag criminal Minnesota (R) House Member John Kline sponsored his own BIll which allowed the Wall Street Banks and the Fedeal Government to charge up to 10% for future Student Loans!!

There isn't a chance in heck that the money making profits of Colleges and Universities, along with the Federal Government are going to allow Student Loans to be anything but the profit and gain machine they currently are.

Please for the sake of all people, STOP BELEIVING WHAT THESE LYING WALL STREET OWNED HOLLYWOD POLITICIANS TELL YOU! Have you no thought process? Politicians will tell you anyting you want to hear just to get into office.

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This would be very helpful to students who need financial assistance.

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