Michigan’s “Pay It Forward” Plan Might Help Students Attend College For “Free”
Michigan legislature recently introduced a plan that could allow students to attend college for “free.” Now, before you jump up and chastise me for advocating free government handouts, hear me out.
The bill would allow eligible students to attend college with the understanding that they are committed to pay a fixed percentage of their future income for a specified duration. It’s not the worst idea.
“The goal is to remove every financial barrier to high education,” Rep. David Knezek (D-Mich.) says, arguing that the financial burden of college is too much for postgrads. “This is a no-interest plan that allows you to pay back as you go and as you can afford it. It takes the monkey off the student’s back.”
The plan is pretty simple, really. For every year a student attends college, he or she agrees to pay a small percentage of his or her postgrad income back to this program. This will amount to 2 percent for community college students and 4 percent for university students.
Here’s the buzzkill: the law puts a huge price on that fifth (or sixth) year of college. Victory laps will end up costing a lot more than a couple extra bar tabs–but this is still a fantastic opportunity to rid future graduates of their college loans and the ever-increasing interest that accompanies them.
The legislation proposes a $2 million kickstart, allotting money for a pilot program of 200 students. The state department will then track the students and verify their postgrad income as they enter the workforce.
So really, it isn’t actually “free.” However, it is interest free. Considering the $2 million initial investment is relatively low in comparison to the projected benefits, it’s worth a shot.
Spreading the earnings across 20 years will protect postgrads from overwhelming student loans. This plan can remove the financial barrier to higher education.
This plan is obviously intended for low income students, and I hope this is handled delicately. I can honestly see this blowing up in Michigan’s face if the government is not selective and demanding with those who are given this opportunity.
A drawback could be a graduate who ends up making significantly more money than he or she initially projected will end up paying his or her tuition many times over. But at that point, the graduate is making a shit ton of money, so who cares?
[via Detroit Free Press]
Image via The Blade
Tuition at UM is $25k a year roughly. If you graduate in 4 years you would have had to pay $100k. Now you would pay money back for 20 years. If you start making $100k right off the bat, 4 percent of that is $4000. So paying $4000 a year for 20 years ends up being $80k.
I’d take that any day
11 years ago at 10:56 amNo college kid makes a $100k right out of college.
11 years ago at 2:09 pmnot with that attitude.
11 years ago at 2:58 pmThat is my point. I was using that number to prove how even if you made an insane amount directly after graduating you would still be paying less with this proposed method than what the current method is.
11 years ago at 3:19 pmHowever you’re assuming they would peak at 100k, if their pay went above that the 4% would be more likely to cover the difference. Granted most degrees are useless and wont be paid back anywhere near that mark (read as:underwater basket weaving will continue to be a drain on the economy)
11 years ago at 11:38 amNo. I’m assuming they would start of around 60-80k. So the raises would end causing average yearly salary to be 100k probably. You would have to average a pay of 125k a year to pay 100k back to the school. And if I’m making 125k a year I’m a little less worried about paying that back to the school
11 years ago at 2:29 pm“Making a shit ton of money, so who cares?” Probably the person who is making that money by working hard. I think the word you are looking for is socialism at that point.
But an interesting idea nonetheless.
11 years ago at 10:57 amYeah, completely true, but it’s still a hell of a lot more money than they would’ve made if they couldn’t have gone to college because of the program.
I still think it’ll probably blow up in their face somehow regardless.
11 years ago at 11:09 amI think that’s one of the risks that people would be more than happy to take. This is an opportunity, not a mandate, and I would think that people who have already received a fully paid, interest free education might be willing if not eager to provide others with the same opportunity.
11 years ago at 11:09 amAbsolutely it is nothing more than redistribution and passing cost along to someone else. If you’re (eventually) paying $60k for a $100k education, who’s going to cover the other $40k? That’s right, someone else. Someone, somewhere always pays for it.
If you want to lower the cost of college, kill the bloated admin staffs and cut off the fire hydrant of “free” federal money. Make the colleges compete for your tuition dollars by lowering their costs.
11 years ago at 11:43 pmThis guy gets it, someone buy this man a beer.
11 years ago at 11:35 amWithout any more knowledge than what is in this article, I would think one could possibly renegotiate the terms if you ended up making way more money than you initially expected.
11 years ago at 11:01 amAnd this would create new jobs. We would have people negotiate these contracts with post-grads. More agencies! Because nothing is ever corrupt within those.
11 years ago at 11:49 amBut you have to trust everyone gets jobs… Ive seen Detroit
11 years ago at 11:25 amIs this for just in-state students? What about international? I doubt they can take your money if you leave the country after graduation with no intentions of coming back. I can see some foreign fucks coming in, getting a free education, then fleeing the country to use their superior education in another world, maybe even against us. Fucking foreigners. This is making me very angry.
11 years ago at 11:28 amthere is such a deep vast pool of knowledge here
11 years ago at 4:11 pmKeep in mind that this plan simply states that you have to pay 4% for five years, for each year you’ve attended. In essence, those going to grad school can continue to use this program.
So to use some rough estimates: 6 year degree – Masters in Finance – CA or CPA firm – 90K
8 years – Doctorates – Anesthesiologist – 120K
90K a year with 6 years of school would cost you $108,000 over 30 years.
120K a year with 8 years of school: $192,000 over a period of 40 years.
At 30 and 40 year time periods, you can expect your salary to grow tremendously in that time period. Hell, you might even be retired and living easy before you even finish paying this off. The fact that it’s spaced out makes it incredibly easier for people to pay back. The 4% is obviously flexible depending on what your income is.
11 years ago at 1:47 pm