Hillary Clinton Calls For Deferring Student Loan Debt For Entrepreneurs In New Tech Innovation Plan
Posted By Derek Johnson on June 28, 2016 at 5:06 pm
Presumptive Democratic Presidential nominee Hillary Clinton rolled out a new technology and innovation plan today that includes provisions to defer, and in some cases forgive, student loan debt for college graduates who start their own businesses.
“A smaller proportion of millennials today are starting new ventures as compared to their predecessors,” reads a fact sheet released by the Clinton campaign. “This is not for a lack of desire—more than half of America’s millennials say they want to start a business—but barriers like student debt and a lack of access to credit are holding young people back.”
Clinton’s plan, part of a broader effort to spur technology innovation, would allow graduates to defer student payments for up to three years while they set up their new business ventures. During this time, their debt would not accrue interest and the principal amount would not rise. Clinton’s plan also states that she will explore similar deferment benefits for the first 10-20 employees hired by these organizations. For businesses and social enterprises that “operate in distressed communities,” the plan also would offer loan forgiveness up to $17,500.
“Hillary is committed to breaking down barriers and leveling the playing field for entrepreneurs and innovators who are launching their own start-ups,” the release says.
Pattern of concern over student debt
Clinton’s proposals come amid a period of great anxiety over the state of the federal student aid system and record student debt. In particular, policymakers are concerned about the aggregate effect that long term student debt will have for a generation of students on financial issues that include their likelihood to purchase a home to their ability to accrue long-term savings.
Business entrepreneurship is another area of concern. A survey conducted earlier this year by the Small Business Majority found that nearly half of millennials who own or have plans to own their own business said student loan debt was a significant barrier. The survey also found similar numbers saying it affected their decision to hire additional employees.
A 2014 report on social trends by the Pew Research Center found that the median net worth of college graduates without student debt was seven times greater than those with debt.
Policymakers have increasingly warmed up to the idea of loan deferment for a wide swath of student debtors and partial or total debt forgiveness for limited groups. The Obama administration has implemented multiple income-based repayment programs over the past six years that tie a graduate’s monthly loan payments to a percentage of his or her income. In February, thousands of students defrauded at the now-shuttered Corinthian Colleges were offered relief for their loans. Federal employees, teachers and other graduates who work in public service also have limited programs for debt-forgiveness.
Clinton’s likely opponent, presumptive Republican nominee and business mogul Donald Trump, has not responded to the proposals and has yet to release an official higher education platform. His campaign website lists the candidates position on six issues, none of which are education-related. Education advisor Sam Clovis has taken a hard line in past interviews regarding debt-free and tuition-free college proposals.
“Unequivocally no,” said Clovis in May when asked if Trump supported debt-free or tuition-free college. “How do you pay for that? It’s absurd on its face.”
Clovis has indicated that Trump prefers policies that encourage responsible borrowing on the part of the student and university, such as restricting the number of liberal arts disciplines that can accept federal student aid and making colleges and universities liable for a portion of their student debtors who default on their loans. He has also criticized direct federal lending and advocates reprivatizing the federal student aid process.
“The liberal arts education is the absolute foundation to success in life, [but] if you choose to major in the liberal arts, there are issues associated with that,” said Clovis, adding “If you are going to study 16th-century French art, more power to you. I support the arts, but you are not going to get a job.”
In addition to deferring and forgiving student debt for entrepreneurs, Clinton’s plan also calls for increased digital service teams to improve the student loan application process, opening up federal financial aid to computer science training programs and establishing incentives for universities to accept credits from career and technical training programs and other “nanodegree” programs.