Conquer your student debt. Refinance now.
This is the second post in a two-part series covering student debt buzzwords on the November 2016 campaign trail. Check out the first three buzzwords here!
You’re going to be hearing a lot about the November 2016 elections for the next year plus, so it’s worth getting up to speed on the jargon the candidates are using. There are a lot of fancy terms related to student loans specifically–we’ve decoded four more of them for you. Keep our cheat sheet handy as the debates get even hotter!
1. Income Share Agreements
Who’s using it: Republicans Chris Christie and Marco Rubio
What it means: Instead of taking out a fixed loan amount and automatically going in the red, your tuition is funded by individual investors — in exchange for a percentage of your income once you’re in the real world.
Where it comes from: In the 1950s, Nobel-prize winning economist Milton Friedman proposed the idea of people selling “shares” of themselves to investors who would finance their education or training. A few startups, like Lumni, have put the idea into action — mostly outside of the U.S. — with positive returns for investors.
Look out for: Bills, bills, bills. The legal waters are murky when it comes to regulations around ISAs, and critics are concerned that the agreements could exploit students. The decision currently sits with the House: Republican candidate Rubio and former Rep. Tom Petri (R-Wis.) introduced a bill in April 2014 to make ISAs legally enforceable contracts, and Rep. Todd Young (R-Ind.) and Rep. Jared Polis (D-Colo.) introduced a similar, bipartisan bill last month.
What we know so far: Rubio has a bill in the House that would give ISAs regulatory clarity, as well as set caps on income percentages and payment periods. Christie has publicly come out in support of ISAs — he argues there’s no downside for students, and investors have incentive to help the students succeed to regain their money. On the institutional side of things, Purdue University recently announced that it’s planning to offer ISAs for students by Spring 2016–it’s the first major university to do so.
2. Personal Responsibility
Who’s using it: Republicans Ben Carson and Christie
What it means: Students who can’t afford college can and should work their way through school to pay for it. Both believe that the federal government should not be in the business of entirely eliminating college tuition or student loans.
Look out for: Personal anecdotes. Carson likes to talk about how he benefited from working his way through college, and Christie tells a similar story about his father.
What we know so far: Christie criticizes free community college. (“We know there is nothing free in the world.”) Instead, he supports expanded Pell Grants and universities offering more flexible schedules to include both night and weekend classes, so students who need to work can still attend college. Carson has yet to propose a formal solution, but emphasizes work as the go-to solution for less student debt.
3. Tuition Freeze
Who’s using it: Democrat Martin O’Malley
What it means: To stem the tide of tuitions rising faster than inflation and family incomes, O’Malley proposes keeping state tuitions at current rates for the foreseeable future.
Where it comes from: As governor of Maryland in 2007, he kept tuition steady over a four-year period, then limited additional yearly tuition hikes to 3 percent.
Look out for: More candidates supporting limits on annual tuition hikes. Fellow Democratic candidate Lincoln Chafee also froze tuition at state schools as governor of Rhode Island. Ohio Governor John Kasich and Wisconsin Governor Scott Walker — both Republican candidates — have also implemented tuition freezes in their respective states.
What we know so far: According to the U.S. Department of Education, freezes worked for Maryland — the state’s public school tuition rate grew at a slower rate than any other state in the 2012-2013 school year. But critics argue that, without additional reform, freezes are a Band-Aid fix.
4. Tuition-free College
Who’s using it: Democrat Bernie Sanders
What it means: Making public colleges free, à la Denmark and Sweden.
Where it comes from: The Vermont senator’s proposed College for All act would increase taxes on Wall Street in order to dramatically increase funding to state schools. It would also slash student loan interest rates by 50 percent.
Look out for: A lot of rhetoric. The “debt-free college” camp may position themselves as even more progressive than Sanders (a self-described democratic socialist) by calling for a wider cornucopia of debt-tackling tactics.
What we know so far: The bill’s $70 billion a year price tag means it’s got zero chance of passing. But it will certainly spark debate.
Background reading: The Candidate With a Plan for ‘Free’ University Education