Clinton’s Plan to Reduce College Costs Could Actually Fuel a Tuition Spiral

Hillary Clinton’s seems to believe that if she wants to replicate President Obama’s electoral success all she needs to do is emulate his campaign. She’s hiring the same top advisers, she’s using the same infrastructure, even the “Hillary for America” name is a direct rip-off of “Obama for America.” But the crucial ingredient is trying to cobble together a majority by appealing to the same set of diverse constituencies: Women, minorities, white collar workers, and perhaps most importantly, young adults.

The problem is that 2016 is not 2008. After seeing their opportunities plummet under President Obama, blue collar workers have coalesced around the Republican Party. Jewish voters, once reliably Democrat, are increasingly looking at other options, especially after Obama’s deal with Iran. Conservative Democrats are an ever-rarer breed, having been largely pushed out by the party’s more progressive elements, typified by Bernie Sanders. Voters who were unified and motivated by their opposition to the Iraq War have largely faded into the background, the result of destabilization in the Middle East.

And then there is young adults. Over the last eight years young adults’ enthusiasm for President Obama has dimmed in proportion to the promises he’s broken. It turns out he’s not the great reformer, he’s simply another politician, more interested in winning elections than changing the way business is done in Washington.

All of that could spell trouble for Hillary Clinton and she knows it. Unlike Obama, she’s never going to win constituencies over with the power of her oratory. She can’t sell a message of fresh ideas or hope for a brighter future or change in the way Washington works. She’s not an upstart underdog with a powerful origin story. She’s a dyed-in-the-wool political animal who has spent decades in the public eye, often for all the wrong reasons.

Rather than win voters with the power of her ideas she’s content to buy them with the power of cash. So it’s not surprising that Hillary Clinton unveiled a $350 billion plan to reduce the cost of college for many families.

To be fair, this is the best proposal we’ve seen from a Democrat candidate yet. Unlike Sen. Bernie Sanders plan, the Clinton proposal doesn’t promise a free college tuition, which would benefit mostly well-to-do families, but instead offers four “debt-free” years at an in-state public university, which would nevertheless still likely cause an uncontrollable tuition spiral (for more reasons why this is a bad idea read here, here and here). But hey…progress!

It’s also the only Democrat proposal to adopt several conservative ideas. For instance, the plan makes mention of new requirements for colleges to be transparent about student outcomes in order to receive federal money, it says that it will simplify the federal student aid application, and it hints at accreditation reform, which is needed to stop the current cartel-like behavior that institutionalizes the status quo.

Unfortunately, none of the plan’s merits are enough to outweigh the central problem with nearly every progressive proposal: By subsidizing the cost of college you’re simply shifting costs away from college students and onto taxpayers. The problem with that logic is that most college students will become taxpayers themselves (if they aren’t already), which means that the federal government is still giving college students a subsidized loan, they just happen to be collecting repayment in the form of taxes rather than loan payment.  Some will no doubt argue that’s a good thing since the tax burden is tied to income levels, but that completely eliminates any market incentive for young adults to pick a competitively priced school or for colleges to keep their prices low. In fact, it gives colleges every incentive to jack up their tuition prices, knowing that the cost will be borne by the deep pockets of the federal government, not the price conscious college student leery of future debt.

As the editors of the National Review explain, Clinton’s plan doesn’t do much to address these incentives:

There are half-hearted proposals in here to help mitigate the iron law of what subsidies do to prices, and most of them are bad: A requirement that colleges spend a certain share of their budgets on instruction, for instance, is appealing but hamfisted, recalling Obamacare’s “medical-loss ratio” requirement. Revealing even more of Clinton’s political aims are new rules aimed only at for-profit colleges, which should be allowed to innovate and compete with nonprofit institutions on even ground. Schools need to be held accountable for their performance, but spending more federal dollars on higher education and trying to micromanage the results from Washington risks bringing us the same pricey, mediocre results we have from our K–12 system.

Even the U.S. Secretary of Education, Arne Duncan, entered the fray, arguing that the Clinton proposal failed to answer one of the main challenges facing higher education.

“The cost piece is obviously a big deal, but it’s more complicated than that,” said Duncan, in an interview. “Yes, we have to reduce cost…but the other part is the quality piece. Completion rates are so low, and if all we’re doing is making something that doesn’t work for half of the people cheaper to me that’s pretty insufficient.”

Sadly, this proposal, like almost all of the other “free tuition” proposals we’ve seen, is less about good policy than it is about good politics. Clinton knows she needs the support of Millennials if she’s to ever have a chance in the general election. But young adults would be wise to recognize that a candidate who feels the need to buy your votes probably doesn’t ultimately have your best interests in mind.