Michigan legislators have introduced a plan that would allow students in the state to attend college tuition free. Under the proposed program, students would be given free tuition to attend college, but would be required to payback a fixed percentage of their income for a set amount of years following their college graduation; this money would go into a special fund that would in turn help other students attend college.
The legislation introduced, dubbed “Pay it Forward,” would require the state to provide $2 million in start-up money for the fund, which would cover a pilot program of 200 students. Democratic State Representative Theresa Abed helped introduce the bill and believes the $2 million requirement from the state to be a worthy investment in the state’s future.
There are over 20 states currently looking into free tuition programs. Michigan’s program would require students who receive free tuition under the program to pay back four percent of their income for five years for each year they attended school free through the program, meaning if a student receives free tuition for four years, the student would be required to pay back four percent of their income for 20 years. For community college students, the rate would be lowered to 2 percent. Borrowers are not required to participate in the program.
With the average college graduate handcuffed with around $35,000 in debt due to college expenses, bold ideas are certainly needed; however, the plan for free tuition isn’t without its critics.
Some economists point out that those who do extremely well professionally following graduation could pay a considerable amount more than those who do poorly. Others point out that the program could become insolvent if high earners avoid the program and only low earners take advantage of the free tuition offered.
Susan Dynarski, economist at the Brookings Institute, agrees with the criticism but believes a few minor tweaks could address these issues. The key change Dynarski recommends is to denominate the debt owed through the program. In that way, those who do well following graduation could pay back the principle plus interest and be free of the program, even if that only takes 10 years. Further, to protect those who fall on hard times, Dynarski proposes balance forgiveness after 25 years. By ensuring that high earners won’t be monetarily punished for their success, Dynarski believes the program will be more universally attractive and more apt to succeed.
An amendment has been proposed to cap the amount a graduate is required to pay back.
Additional criticism of the bill questions whether the program would eliminate the incentive for students and universities to control costs. If cost isn’t a concern, the fear is that more students will look to enroll in the most expensive programs under the assumption that the more expensive programs are the better program; this could in turn cause universities to raise tuition to convey an impression of quality.
Concerns aside, Dynarski notes that the plan introduced in Michigan to offer free college tuition has political momentum, though the plan has yet to be introduced for a legislative hearing.
By Scott Merrow
Follow Scott Merrow on Twitter @SRMerrow
Detroit Free Press