A proposed college graduation gift: $0 student-loan debt

• Two Arizona Democrats propose a debt-free college.
• Discussion is likely to figure into the 2016 presidential race.
• Student-loan debt in Arizona has been rising but is still below the national average.

Two Arizona Democrats think college graduates should leave school with a cap, gown and diploma — and a zero balance on their student loans.

U.S. Reps. Raúl Grijalva of Tucson and Ruben Gallego of Phoenix are helping to lead the charge among liberals in Congress to guarantee debt-free college.

The proposal, which has the support of key Democratic senators such as Elizabeth Warren and Chuck Schumer, faces long odds in the GOP-controlled Congress, where a majority of lawmakers oppose expensive expansions of government.

But Republicans are talking about the need to lower college debt as well, and the discussion already is figuring into the 2016 presidential race.

Republican presidential candidate Marco Rubio last year put forward a plan that relied on private-sector solutions, such as free online classes.

The only Democrat officially in the presidential race, Hillary Clinton, is weighing the debt-free college plan, her campaign said this week.

Grijalva said students across the country will be asking presidential candidates for solutions.

"There is a general feeling out there that we have abandoned a college education as accessible for all students," he told The Arizona Republic. "Education shouldn't (mean) mortgaging your career to pay off your loan."

An Arizona member on the other side of the aisle, Republican Rep. Matt Salmon, is talking about college affordability, too.

He introduced bipartisan legislation with Rep. Jared Polis, D-Colo., last session to encourage universities to shorten the time students need to graduate by awarding credit for life experience when they pass a competency test or through other methods. The bill generally addresses military veterans and professionals returning to school.

Less time in classes would reduce the cost to attend, Salmon said.

"People should be rewarded for what they know and not for their seat time," he said.

Salmon intends to bring back the legislation, which unanimously passed the House last year and garnered support from President Barack Obama, but stalled in the Senate.

The idea is part of the liberal plan introduced in the House last week by Grijalva, which calls for "innovations" to shorten class time.

But the promise of debt-free college could be far more costly than Obama's recent call for free community college. The liberal plan would extend to all university degrees, including graduate school, law school and medical school. And it's more sweeping than what Washington politicians have tried to do in recent years, such as lowering interest rates on student loans.

But the idea of a debt-free education is popular among students such as Arizona State University senior Shauna Evans. The 22-year-old estimates she will owe about $25,000 in federal and private loans when she graduates next month with a bachelor's degree in marketing.

She's debating whether to go to work after graduation or take on more debt to get a master's degree.

"You see how much debt you have, and it just puts more pressure on you," she said.

U.S. Reps. Kyrsten Sinema, whose district includes ASU, and Ann Kirkpatrick, whose district represents Northern Arizona University, did not respond to requests for comment on whether they would support the legislation. The two Democratic lawmakers hold seats in swing districts where liberal proposals aren't always welcome.

The legislation so far is light on details, including how to pay for it. Supporters say they could raise at least $29 billion for the plan by taxing wealthy individuals and corporations, a move that is unlikely to attract GOP support.

The plan would boost federal financial aid such as Pell Grants, which students aren't required to repay. The GOP has sought to freeze that program to balance the federal budget.

The proposal would also give more funding to public universities, which have raised tuition in response to state budget cuts.

No state has cut more from its higher-education budget than Arizona, according to the Center on Budget and Policy Priorities, a Washington, D.C.-based think tank. Tuition and fees have nearly doubled since the recession. ASU now charges $10,157 per year for in-state undergraduates, although grants and scholarships lower the out-of-pocket cost for many students.

Gov. Doug Ducey and the Republican-led Legislature cut $100 million from the state universities for fiscal 2016, which is about 13 percent of state funding.

The decision "severely undercut all three universities and passed the generational tax on to (students and) their parents," Gallego said. "We have to start pushing back."

The governor had to make tough decisions to balance a $1.5 billion shortfall, said Ducey spokesman Daniel Scarpinato.

"In Washington, they don't have to do that, but here we do," he said.

"Governor Ducey wants to see Arizona universities remain as affordable as possible," Scarpinato said, noting that Ducey urged the Arizona Board of Regents to find efficiencies instead of raising tuition. "They are a great value as they stand, and we would like to see that continue."

Jay Heiler, vice chairman of the regents, said debt-free college sounds nice but may not be realistic.

"I appreciate all aspirational energy in furthering higher education for America's youth, but they must be grounded in reality and not political fantasy," he said.

Salmon said he opposes the state cuts to university funding but filling the hole with federal money, as the Democratic proposal in Congress would do, isn't the solution.

"Arizona has cut way back, which I don't agree with, but the answer is not now to move it toward ... the federal government. ... We already have an $18 trillion federal debt," he said.

But Salmon found common cause with Gallego and Grijalva, who argue the brunt of the problem falls on middle-income families.

"As the state has backed away, the poor kids continue to get Pell Grants," Salmon said. "The rich kids — their families can weather the storm. It's the middle class that's totally getting the shaft here, and it really makes me angry."

Since the recession, more undergraduates at Arizona's state universities have left with student-loan debt. The share has risen from 52 percent of undergraduates to about 60 percent from five years ago, according to data from the regents.

Students also owe more. Graduating seniors with student-loan debt owed an average of $22,903 last year — a 15 percent increase over five years ago.

That's still less than the national average, though, where bachelor's-degree recipients at public universities who graduated with debt borrowed an average of $25,600 in 2013, according to the College Board, a non-profit group that researches trends in higher education. About 59 percent borrowed money.

Some critics have blamed easy access to loans and grants as one factor pushing up the cost of college. In 1987, then-U.S. Secretary of Education William Bennett wrote an op-ed piece in the New York Times that said increases in federally subsidized loans enabled colleges "blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase."

This idea has been debated in educational circles ever since.

National education experts say some student-loan debt isn't a bad thing because college graduates generally go on to higher-paying jobs and better career opportunities. College graduates also have lower unemployment rates, according to the U.S. Bureau of Labor Statistics.

The key, though, is balancing debt with earnings. That balance can be tricky right out of college.

Having too much student-loan debt can affect other spending.

"Students who graduate with tens of thousands of dollars in debt are unable to continue to contribute to Arizona's economy, unable to purchase a car or a home after they graduate when they are barely scraping by," said Corina Tapscott, incoming president of ASU's Downtown Phoenix campus, who spoke in support of the liberal debt-free college plan.

The regents on Monday touched on student-loan debt at a meeting where members discussed tuition proposals for the upcoming school year. Debt is one of several factors the regents monitor.

Regent Heiler said students have been borrowing money for decades with student loans extended on fairly easy terms for people on all income levels.

"There are all kinds of decisions that go into debt," he said, noting that sometimes students are tired of being poor and decide to borrow money.

The universities don't restrict how students spend their student-loan money, Regent Rick Myers said. For example, some could choose to buy cars with their loan money.

"We don't force students to use their federal debt to just spend their money on education," he said.