Political Animal


September 10, 2012 3:31 PM Clinton, Obama and Income-Contingent Student Loans

By Ed Kilgore

It didn’t get much attention in a policy-packed speech, but Bill Clinton’s address in Charlotte included this important section:

[A]fter a decade in which exploding college costs have increased the drop-out rate so much that we’ve fallen to 16th in the world in the percentage of our young adults with college degrees, his student loan reform lowers the cost of federal student loans and even more important, gives students the right to repay the loans as a fixed percentage of their incomes for up to 20 years. That means no one will have to drop-out of college for fear they can’t repay their debt, and no one will have to turn down a job, as a teacher, a police officer or a small town doctor because it doesn’t pay enough to make the debt payments. This will change the future for young Americans.

As Stephen Burd notes in his article on student loan indebtedness and the abuses associated with collecting payments in the September/October issue of the Washington Monthly, income-contingent loans were a regular campaign trail topic for Bill Clinton in 1992, and he succeeded in making this an optional feature of the student loan system. But opposition from banks and other powerful lobbies kept this initiative small and poorly marketed, so it’s noteworthy that Obama is trying to give it another push.

The timing couldn’t be better. Aside from Burd’s harrowing tales of people struggling to get along being harassed by student loan debt collectors, the New York Times recently ran a front-page story by Andrew Martin on the industry that has grown up around the federal government’s unforgiving rules on student loan delinquency. It’s time for a different approach, and both Clinton and Obama have the right idea.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.


  • Robert on September 10, 2012 4:12 PM:

    The first sentence of this statement is dubious. The college drop-out rate did not increase, so it is doubtful that rising college costs caused it. And while it's true the US college graduation rate has fallen to 16th in the (industrialized) world, that's because other countries have surpassed us, not because we are doing worse.

  • Josef K on September 10, 2012 4:26 PM:

    I finished my Masters degree (MA in Political Science, Public Policy 'emphasis') in 1998. I began repayment in the fall of that year. My original balance was around $45,000. I was 28 years old at the time, single, and working as a temp in Washington DC, commuting from Alexandria into DC itself.

    Today I am 42, married, two children (11 and 3), a third child expected mid-2013, live in Brooklyn and work in Manhattan. My wife and I both work in NYC City government.

    I presently still owe an estimated $35,000 to two different servicers (one handles my Stafford accounts, one handles the PLUS account), paying each $150-165 a month, only a third of which I believe actually goes towards the principle.

    I've honestly given up hope of clearing this debt before my eldest reaches 18. Any kind of reform will be a welcome change, but entirely too little too late for too many of my generation.

  • Blue Girl on September 10, 2012 6:30 PM:

    This element of student loan reform is why it's been possible for me to stop just talking about and start pursuing a law degree and a second career in environmental law. The part of Missouri that my family has called home for eight generations is rural and poor and in the thirty years since I graduated from high school and left the literal green pastures for metaphorical greener ones, it has been inundated with factory farms that have wrecked large swathes of the environment and since it isn't the "pretty" part of the state and tourists don't flock there, no one gives a damn who isn't from there.

    I am, I do, and now, thanks to this change in student loans, I can do something about it besides write scathing blog posts that maybe 500 people will see but that ultimately change nothing. Instead, I'm looking forward to spending the final 1/3 of my life fighting for my home and the generations who come behind me and who live there, and their quality of life. That's some more of that there change I can believe in that's been all the rage the last four years or so.

  • jjm on September 10, 2012 6:38 PM:

    Hope it is applied retroactively to those like Josef K above, who could really use the relief.

  • Monisha on September 11, 2012 4:07 AM:

    Thanks for your grateful college blogs informations.

  • fillphil on September 11, 2012 11:53 AM:

    Why don't we rearrange the educational system to include: extending HS for 2 more yrs for those students who wish to continue that would provide , basically, a community college assoc deg or transfer credits to a college/university for formal major education. The facilities are already there and the cost of a college diploma would decrease and improve the student loan situation. Seems possible.

  • Richard on April 02, 2013 10:01 AM:

    I think that student loan debt is one of the most significant problems for the American economy. Prices for college tuition are sky high and some sources inform that student loan interest rates will continue to grow. Youth has no alternatives, all they can do is to save money or get in debt to get loan application approved in 1 hour attend college. But everything wouldn’t be so bad if college degree was a guarantee of a successful employment and stable income. Lots of graduates are unemployed and have thousands dollars of debt. Many people apply for loans to because they need to make payments on their student loans. Government should stop talking and start doing something with the problem because words aren’t enough anymore.