Pay It Forward Proposal Could Help Students Afford College
KELLY MCEVERS, HOST:
NPR's been looking at how American families are paying for college and the huge debt some students are racking up. Some states are experimenting with a new idea. It's called Pay It Forward and here's how it works. The state pays for students' tuition. After they graduate and get jobs, the students are expected to repay it.
Sounds like a student loan, right? There's a big difference. Graduates with higher salaries - say, stockbrokers or software engineers would pay more, maybe even more than their education actually cost. NPR's Leah Binkovitz explains.
LEAH BINKOVITZ, BYLINE: Under Pay It Forward, it's all income-based. You'd pay a fixed proportion of your salary for a certain number of years. So that software engineer might be subsidizing, say, a school teacher with a modest salary.
REPRESENTATIVE DAN KILDEE: This is a way just to make a simple contribution back and bring another student along.
BINKOVITZ: That's Congressman Dan Kildee of Michigan. The Democrat recently co-sponsored a bill in the House that would fund a handful of pilot programs to try this idea. States such as Oregon, Ohio and Kildee's own Michigan have expressed interest, though any real action is still down the road. Kildee says for some people these plans could mean the difference between going to college and finishing - and, well, not.
KILDEE: Basically says we are betting on you, that you will make it.
BINKOVITZ: There are still a lot of questions - how much should each student get, what happens if they don't get a job, and would students be willing to do this?
NAOMI WALTENGUS: If, when I graduated, if they were to implement something like that here, I would not mind.
BINKOVITZ: Naomi Waltengus is a sophomore at American University in Washington, D.C. She's studying communications and literature. She likes the altruistic approach.
WALTENGUS: Because of someone else, I got to go to school, so I'd be glad to help other people or to help people in the future be able to go to school.
BINKOVITZ: Alex Berlin, also AU class of 2016, isn't so sure.
ALEX BERLIN: Coming from a background where we don't have very much available cash, having the money given to me upfront is great, but in the long term it would be horrible to have to pay more. And I think it could really mess up a lot of people's future plans.
BINKOVITZ: Berlin says he'd rather pay back his $25,000 than a possibly fluctuating amount.
BERLIN: I don't think it's that fair.
BINKOVITZ: David Bergeron agrees. He's an education expert at the Center for American Progress in Washington.
DAVID BERGERON: The Pay It Forward proposals really are loans, but where you never know how much you really owe.
BINKOVITZ: The way he sees it, the real problem isn't the financing, it's the overall cost of college. Bergeron says income-based repayment programs already exist within federal financial aid, except without what he calls the inequity of paying someone else's tuition.
BERGERON: Ultimately you only pay what you owe, plus the interest that accrued on that loan.
BINKOVITZ: In terms of affordability, he says there are plenty of options out there already, options like the Pell Grants. That's the main federal aid for low income students and ,students never need to pay those back. Yet data show most program recipients end up about 9,000 short every year and for all college students, the average graduate comes out with a Bachelor's degree and about $30,000 in debt.
That's a lot to take on, and studies show it often dissuades low income students from going to college at all. Congressman Kildee says Pay It Forward could change their minds.
KILDEE: It may actually persuade them to take a different path in life.
BINKOVITZ: Leah Binkovitz, NPR News.
MCEVERS: Support for our stories about paying for college comes from T. Rowe Price, understanding the connections of a complex global economy. T. Rowe Price, invest with confidence at T. Rowe Price.com.
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