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Essay says the 'pay it forward' plans for free tuition aren't free and will hurt students

Don't Pay It Forward
November 4, 2013

The sales pitch is enticing: Let students go to college for "free" and ask them to pay later by taxing a percentage of their incomes once they have jobs. The money coming in from graduates, then pays "forward," covering college costs for current students and alleviating the fear of debt that keeps many college-qualified students from even applying and that discourages college graduates from pursuing careers that may not have high salaries.

That’s the seductive premise behind Pay It Forward, billed as a "debt-free" approach to higher education, currently under consideration in Oregon. But like many sales pitches meant to lure consumers, Pay It Forward provides a superficial "fix" that has more downsides than up, thereby masking the real problems in higher education financing.

There is no disputing that higher education is facing a crisis of affordability. State funding per student has dropped to its lowest level in 25 years, shifting much of the financial responsibility for college costs to students and their families. The result? Too many students have to choose between avoiding college altogether or taking on overwhelming amounts of debt to pay for a degree.

We applaud state policymakers who are working to identify ways to rein in college costs. The United States needs more college-educated workers, and we won’t have them unless we make college more affordable. But we have to make sure that the solutions we put into place don’t work against students and taxpayers by inflating college costs even more, especially for the families who can least afford them.

Because Pay It Forward proposes to tax graduates’ income at a certain rate every year (say 4 percent) for up to 25 years, graduates will end up paying very different amounts for their education — often more than what that education actually cost. An analysis from the Oregon Center for Public Policy estimates that an average student could overpay more than $7,000 under Pay It Forward. Worse, the neediest students — those currently receiving federal or state financial aid — could be hit the hardest, potentially paying thousands more over their lifetimes than they would have under the current system.

Let’s not forget, either, that Pay It Forward only addresses tuition, which makes up just part of total college costs; room and board, books and supplies, and miscellaneous fees aren’t covered. At the University of Oregon, for example, those additional fees amount to almost 60 percent of a student’s total costs. Of the $23,370 total estimated cost of a year at Oregon for a resident of the state, about $9,300 is consumed by tuition. Under Pay It Forward, the average student would have to cover the remaining $14,000 out of pocket or through loans, creating a double whammy for students: They’d have to pay off student loan debt in addition to having their income taxed to "pay it forward."

Some of these concerns could be addressed in any final package. Our biggest concern with Pay It Forward, though, is that it doesn’t address the root issue: rapidly escalating college costs. By positioning higher education less as a public good than as an individual transaction, Pay It Forward absolves both state policymakers and institutional leaders of any responsibility for doing what it takes to slow the rapid increases in the cost of a college education.

Instead of demanding cost-consciousness among college presidents and an ongoing commitment from states to maintain or increase higher education funding, Pay It Forward simply puts a big Band-Aid over the current trend of state disinvestment and the transfer of financial burden from the state to students and their families. Ironically, although trying to ensure progressively that each graduating class opens the door for ones to follow, Pay It Forward could actually just open the door to more privatization of public education.

States should develop innovative solutions to the rising cost of college, but they should be transparent about them. If they’re going to sell students on debt-free college, they should offer debt-free college. Loan debt simply repackaged as delayed tuition payments may be a catchy sales pitch, but it’s a bad bargain for students.

Bio

Kati Haycock is president of the Education Trust, a nonprofit research and advocacy organization.

 

 

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