Not RU specific: Pay it forward? Not so fast

[srru86]

Some push back on this new idea in paying for college.

Basically the plan is college tuition is "free" and students pay back over their lifetime earnings, sometimes pegged to their income.

This means the colleges pay up front and then become debt collectors on the back end.

Basic objection is the plans continue the trend of shifting public education costs from the state and onto the individual.

American Association of State Colleges and Universities
The "Pay It Forward" College Financing Concept: A Pathway to the Privatization of Public Higher
Education

Conclusion?Creating a Lifelong Tax and Privatizing Public Higher Education through Pay It Forward is Not the Solution to Addressing College Affordability

Inside Higher Ed Opinion item
Don't Pay It Forward

 

[derleider]

Personally, I think the best method would be a voucher system. Every person who graduates high school gets $x a year from the Federal government for college. The government stop issuing loans. If you are rpoor you can get more money in grants.

It would put the ability to pay more at the forefront. If you start out with the assumption of taking out loans, then it makes it easier to take out bigger loans (well I'm already paying $60,000 - whats $90,000). Whereas if you start out with a free option, then you probably think alot harder about the non-free options.

but yes, I think college would probably end up being more affordable if colleges ultimately paid up front - it would give them at least some incentive to reign in costs.

 

[Upstream]

Can someone give me a quick summary of the Pay-it-forward concept (I didn't want to spend time now to read the 12-page document linked in the OP).


From the quick browse, it sounds like a program where a student's tuition at a public university is covered up-front, and the student has an obligation to repay that amount over a future time-period.

How does this differ from student loans? In a student loan, the student gets money up front to pay tuition, and then has an obligation to pay it back over a future time-period.

 

[TonyLieske]

Originally posted by Upstream:
Can someone give me a quick summary of the Pay-it-forward concept (I didn't want to spend time now to read the 12-page document linked in the OP).


From the quick browse, it sounds like a program where a student's tuition at a public university is covered up-front, and the student has an obligation to repay that amount over a future time-period.

How does this differ from student loans? In a student loan, the student gets money up front to pay tuition, and then has an obligation to pay it back over a future time-period.

If I understand the concept correctly, it is because the students aren't paying back a specific $$$, they agree to fork over a % (albeit small) of their income for the rest of their life. For a really, really successful student this could be millions of dollars. For the kid with no ambition it could be ~10,000-20,000. Essentially tuition works like income tax.

Its a horrible plan IMHO.

 

[derleider]

Originally posted by TonyLieske:

Originally posted by Upstream:
Can someone give me a quick summary of the Pay-it-forward concept (I didn't want to spend time now to read the 12-page document linked in the OP).


From the quick browse, it sounds like a program where a student's tuition at a public university is covered up-front, and the student has an obligation to repay that amount over a future time-period.

How does this differ from student loans? In a student loan, the student gets money up front to pay tuition, and then has an obligation to pay it back over a future time-period.

If I understand the concept correctly, it is because the students aren't paying back a specific $$$, they agree to fork over a % (albeit small) of their income for the rest of their life. For a really, really successful student this could be millions of dollars. For the kid with no ambition it could be ~10,000-20,000. Essentially tuition works like income tax.

Its a horrible plan IMHO.

I think it would be a fine plan - if every university abided by it. The problem is - for people who know they are going to make alot of money - why would you go to a pay it forward school instead of a regular tuition school. If you are going to be a doctor making $300,00 a year, say paying 5% for 30 years (I dont think its for life) is $450,000.

So pay it forward schools would tend to attract people who don't expect to earn much. Thus basically creating a downward funding spiral.

And of course the other issue is coming up with billions of dollars to fund the school while the pay it forward system got going.

This is all in response to the perceived student debt crisis (which is really a couple of different things - the lack of state funding, a general lack of jobs situation, and the real issues with non-for-profit diploma mills churning out useless degrees to desperate dead enders at ridiculous prices).

 

[srru86]

Some background
NPR - Florida
Explaining The Push For 'Pay It Forward' Tuition Plans

Detroit Free Press - Michigan
Mich. tuition plan would pay it forward

Oregonian
Oregon's tuition-free 'Pay It Forward' college finance plan would cost state up to $20 million a year

 

[NorthernKnight]

Originally posted by srru86:
Some push back on this new idea in paying for college.

Basically the plan is college tuition is "free" and students pay back over their lifetime earnings, sometimes pegged to their income.

This means the colleges pay up front and then become debt collectors on the back end.

Basic objection is the plans continue the trend of shifting public education costs from the state and onto the individual.

American Association of State Colleges and Universities
The "Pay It Forward" College Financing Concept: A Pathway to the Privatization of Public Higher
Education

Conclusion?Creating a Lifelong Tax and Privatizing Public Higher Education through Pay It Forward is Not the Solution to Addressing College Affordability

Inside Higher Ed Opinion item
Don't Pay It Forward

two seminal questions in my mind:


1) economics question: what's the implicit interest rate built into the assumptions and how does it compare to federal government borrowing capabilities

2) Societal question: what implication will removing capitalistic responsibility from students to forge a career that creates a positive ROI on their education? asked knowing full well there is zero tie between educational choices and ROI in this artificially pumped up (by availability of student loans) state of academic affairs now.

 

[srru86]

Another thought. Deregulate the accreditation process.

Slate
Smash the System? - The dangerous plan to make college cheaper by busting "the college cartel."

I hesitate to post as this is getting close to current events level stuff but I thought some here might want to read for themselves.

 

[retired711]

Originally posted by srru86:
Another thought. Deregulate the accreditation process.

Slate
Smash the System? - The dangerous plan to make college cheaper by busting "the college cartel."

I hesitate to post as this is getting close to current events level stuff but I thought some here might want to read for themselves.

The Justice Department for years has been trying to diminish the American Bar Association's and Association of American Law Schools' roles in accrediting law schools. For instance, these bodies can no longer comment on the pay of law professors because this is thought to lead to a cartel. No effort has yet been made to turn law school accreditation over to the states. But the state bars already play a role because the states specify who can take their bars. Currently, all states except California require that one have gone to an ABA -accredited law school, and so the power of the ABA remains. In fairness, the ABA has de-bureaucratized its requirements quite a bit, alhough it has added new requirements for clinical education and for ensuring that law school graduates actually pass the bar.