Explaining The Push For 'Pay It Forward' Tuition Plans
A Florida lawmaker has proposed allowing students to attend college tuition-free, and then repay the cost with a percentage of their salary after graduating.
The proposal has been nicknamed "Pay It Forward" tuition because students making their payments keep tuition free for future generations of college students. Students might pay their Alma mater between 2 percent and 6 percent of their annual salary for as long as 25 years, depending on the terms of the program.
The idea was first proposed in Oregon, which is creating a pilot program for lawmakers to consider. In Florida, Sen. Eleanor Sobel, D-Hollywood, introduced SB 738, which would launch a pilot program to create a Pay It Forward program.
Pay It Forward seems tempting on its face. The University of Florida charges $6,270 a year in tuition. The median Florida salary is $41,334 for a household with one earner. Assuming 3 percent payback over 25 years, that University of Florida degree would cost $31,000.
"It's disarmingly apparent that it sounds like a good deal," said Sara Goldrick-Rab, a professor of higher education policy at the University of Wisconsin at Madison.
But Goldrick-Rab said Pay It Forward plans don't address the real cost of college and don't do anything to stop the rising price of higher education.
Tuition typically accounts for less than half the total cost of attending college. But Goldrick-Rab said most Pay It Forward proposals would only cover the cost of tuition. Many students would still need to borrow to pay for living expenses, books and other expenses.
"And then when you finish college you're going to be paying back a percentage of your income every year...and you're going to be paying back your loans," Goldrick-Rab said. "And the two of those together is quite possibly a worse deal than what we're facing now."
This isn't the first time colleges have experimented with repaying the cost of college on graduation. As Politico reported, a similar idea failed at Yale University in the 1970's.
Students at the University of California at Riverside proposed a similar model in 2012. But the only real precedent so far has been at Yale University in the 1970s. Students borrowed money from Yale and were supposed to pay back 4 percentage of their annual income until the entire class had paid off its collective loan. At the peak of the program’s brief life span, more than one-third of the student body was participating. Many wealthier graduates paid a penalty to get out of the program early, and poorer ones quit paying at all. When Yale ended the program at the turn of the 21st century, the university’s president told the Yale Daily News he was relieved the experiment finally ended. Burbank says states have more enforcement power than a private university. The Yale program was a product of the “cultural hubbub of communal good times” of the 1960s, he said. “That faded quickly in the 1970s, when the contributions needed to be made.”
Another short-coming of Pay It Forward, Goldrick-Rab said, is that it likely won't encourage public colleges or state budget writers to deal with the problem of the rising cost of higher education. When the bill for college comes due years after lawmakers are out of office, she said it's unlikely legislators will have any incentive to add state funding or prevent tuition from rising.
But Oregon, Mississippi and Tennessee and other states are also working on another new idea: making at least two years of college completely free for all students. Tennessee estimates the idea would cost $34 million a year and the state would pay for it with lottery revenues.