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Hillary Clinton speaks during an event in Denver.


Hillary Clinton on Tuesday proposed opening up federal financial aid to alternative education providers, softening student loan repayment requirements for entrepreneurs and granting green cards to STEM students as part of wide-ranging tech and innovation agenda.

“We need more job creators, and we need more young people starting businesses,” Clinton, the presumptive Democratic nominee for president, said during a visit to the Denver-based boot camp Galvanize. “What we’ve been doing is insufficient for doing what we want for young Americans or even midcareer Americans.”

The plan proposes $10 billion in federal funding (a significant amount in tight budget times, no matter who wins the election) for students to enroll in vetted boot camps, coding academies, massive open online courses and other programs run by alternative education providers, as well as providing unspecified rewards for colleges that accept those programs as credit toward graduation.

For entrepreneurs, the plan proposes letting them and potentially their first 10 to 20 employees defer payments on their student loans, penalty-free, for up to three years “as they work through the critical start-up phase of new enterprises.” Entrepreneurs whose start-ups serve “distressed communities” or “provide measurable social impact and benefit” will after five years be able to apply to have up to $17,500 of their loans forgiven.

“Starting out can be daunting,” Clinton said, according to The Denver Post. “There’s a lot of risk, even if you have a good idea …. It can be a lot harder if you are juggling student loan payments. And that can cut into what you are able to do.”

Clinton ‘Embracing’ Innovation

Clinton’s proposal to bring alternative providers into the federal financial aid fold is one that enjoys broad political support. The U.S. Department of Education has since last year planned experiments involving partnerships between colleges and alternative providers, while many Republicans, including Florida Senator Marco Rubio, have called for accreditation processes to be overhauled to let alternative providers in.

Clinton's Giveaway
to Silicon Valley

In an essay, Alexander Holt
questions the wisdom
of Hillary Clinton's
loan forgiveness proposals.

Anthony P. Carnevale, director of the Georgetown University Center on Education and the Workforce, said Clinton is the latest politician to endorse the vision of the U.S. postsecondary education system as the country’s official workforce development system. Such a shift could represent a “new deal” for public institutions, which he said may be willing to trade increased scrutiny of student earnings and employment outcomes for more funding.

“What you’re seeing is that people are moving toward legitimizing different kinds of education and training with an emphasis on employment,” Carnevale said in an interview. “There is a centrist view that has emerged.”

Observers who have been supportive of the Obama administration’s work with alternative providers said they were both heartened and a little surprised by Clinton’s proposal, as they had expected she might take a more critical line. Clinton’s debt-free college plan, they said, was structured largely to benefit traditional public postsecondary institutions, and even included language such as “We must bring integrity to online learning.” That plan, however, did mention federal funding for “low-cost, technology-enabled programs.”

Amy Laitinen, director for higher education at the think tank New America, said Clinton has been a “larger unknown” on alternative providers compared to the Obama administration.

“I was unsure whether or not a more traditional Democrat would embrace consumer protection-focused innovation, and it seems with this proposal that she is not only open to it but embracing it,” Laitinen said in an interview. The plan, she said, is a “nice nod to the fact that you can and you should have innovation and consumer protection existing simultaneously.”

Paul LeBlanc, the president of Southern New Hampshire University who recently wrapped up a three-month stint with the Education Department, said he, too, was waiting to hear from candidates on new models of higher education.

“I had some fears that, after an administration that talked a lot about innovation … we weren’t hearing anything from any of the major candidates,” LeBlanc, who has advised the department on new accreditation pathways for alternative providers, said in an interview. “This is a change.”

Clinton’s endorsement of federal financial aid for alternative providers could draw criticism from critics of for-profit companies' involvement in higher education, as well as from some of the education groups that have enthusiastically endorsed her, LeBlanc said.

The plan suggests alternative providers will have to present some sort of evidence of their efficacy in order to participate. While it does not mention accreditation, the plan says students can use federal financial aid for those programs “as long as they are accountable and have proven track records of success.”

Even some alternative education providers have been skeptical about accepting federal financial aid, which they have said could bring applications from students they have little experience serving. Laitinen said those types of alternative providers -- which in some cases serve as a replacement for graduate school -- shouldn't be eligible for federal financial aid.

“If the federal government comes in and starts subsidizing the whole industry and doesn’t have high standards, then it’s going to be a race to the bottom in terms of quality,” Laitinen said. “But if you could use federal dollars to help support nontraditional providers who are helping people who aren’t being helped right now by boot camps, that would be a huge boon to students and where the market isn’t working now.”

Student Loans, Immigration, Copyright

Reactions to Clinton’s student loan proposals for entrepreneurs were more mixed, as observers said the plan lacks the nitty-gritty details needed to determine whether or not the proposals would be doable. The plan doesn’t define which factors determine which communities would be classified as “distressed,” for example, nor the types of “social enterprises that provide measurable social impact and benefit.”

Matthew Chingos, a senior fellow at the Urban Institute, an economic and social policy think tank, called the student loan forgiveness part of the plan a “terrible idea” that subsidizes students “who took out huge loans to attend an expensive private university” rather than Pell Grant recipients. He later expanded on his comments in a blog post.

“There’s no high-quality evidence that student debt is holding back entrepreneurship,” Chingos said in an interview, pointing out that graduates can already defer using income-based repayment. “If you want to encourage people to be entrepreneurs, then write checks to entrepreneurs.”

Still, Carnevale called the idea of taking some of the pressure off entrepreneurs’ cash flow “inventive,” saying it effectively creates “safe space” for recent graduates to create start-ups that could make a difference in underserved communities.

“It means you can do this when you’re in your 20s and you don’t need as much help from Mom and Dad,” Carnevale said. “You don’t need to be a rich kid. You don’t need to be Donald Trump.”

Other proposals that would affect higher education include:

  • As part a broader reform of the immigration system, the plan proposes awarding green cards to students who graduate with advanced STEM degrees and creating a “start-up” visa for foreign entrepreneurs. Today, international students and workers have to be sponsored by a U.S.-based employer and apply to the annual H-1B visa lottery for a chance to one day earn permanent residency, a system many critics say is rife with abuse. Many higher education groups have been pushing to make it easier for graduates from outside the U.S. to remain after graduation, saying that current requirements place American institutions at a disadvantage in recruiting the best talent. Others say the criticism of the immigration system is overblown. "Clinton is dead wrong in claiming we have a STEM labor shortage, as numerous studies show, and flat wages confirm," said Norman Matloff, professor of computer science at the University of California, Davis, who often writes about immigration. "Sad to see that both Clinton and Trump follow the industry party line here, resulting in harm to many U.S. citizens and permanent residents."
  • Clinton endorsed updating the copyright system, which the plan says requires “administrative reform to maximize its benefits in the digital age.” Specifically, the plan mentions finding a solution for “orphan works” -- copyrighted materials whose rights holders are impossible to identify, and pushing for open licensing of research funded by the federal government.
  • Clinton repeated her support for net neutrality, the idea that all traffic on the internet should be treated equally instead of creating what critics have called fast and slow lanes. Higher education and library organizations in 2014 banded together to lobby the federal government to defend net neutrality. The plan also proposes expanding programs such as E-Rate, which have brought fiber-optic broadband internet to some academic and research libraries.

Paul Fain contributed to this report.

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