The $350 billion planÂ to make college more affordable unveiled by Democratic candidate Hillary Clinton Aug. 10 takes a page from the left wing of her party, but it also champions an idea gaining traction on the right: holding schools liable when a student’s education doesn’t pay off.
The notion that schools should pay some sort of penalty if their students fare poorly in the marketplace is a sharp departure from the status quo in which schools receive about $140 billion a year in federal financial aid with few strings attached.
But the growing economic imperative for people to earn a college degree, combined with the rapidly rising U.S. student debt of $1.3 trillion, has generated enormous political pressure to hold schools accountable for the education they are selling.
“We will make sure colleges and universities have more skin in the game if they load students up with debt or programs that don’t lead to good-paying jobs. Students and taxpayers should not be the only ones left holding the bag. Colleges deserve a certain amount of responsibility,” Mrs. Clinton said at a campaign event here on Monday.
“We will crack down on predatory schools, lenders, and bill collectors. If you defraud students, overcharge veterans or mislead borrowers, we’re going to do everything we can to hold you accountable and stop you,” she added.
Currently, colleges and universities with student-loan default rates that exceed 30% for three straight years or 40% for one year risk losing eligibility for federal student loans.
But if schools don’t cross that threshold, there are few other penalties for having higher-than-average default rates.
About 1,800 of the nation’s roughly 6,000 colleges have a three-year default rate above 15%, and nearly 200 have default rates just shy of 30%, according to a white paper released earlier this year by Sen. Lamar Alexander (R., Tenn.), chairman of the Senate Education Committee.
Read more at the Wall Street Journal.