Proposed tuition plan not very cost effective

After further inspection, subsidized payment may be problematic.

JennyRoberts.jpgLast month a petition was started on calling for the “Pay It Forward, Pay It Back” higher education tuition plan to be put to a vote in Pennsylvania. As of Monday evening 1,993 supporters have signed this petition, but my signature will not be among them.

“Pay It Forward, Pay It Back” is a tuition plan based off a model currently being piloted at Portland State University in Oregon. The plan has attracted attention from various other states, including Pennsylvania, for its potential to quell the nationwide buildup of student debt. But under further scrutiny, I don’t think this plan can possibly serve as the cure-all solution many students, including myself, had hoped it could be at first glance.

The current Oregon tuition plan calls for students to pay no tuition while enrolled in school at public institutions. Three years later, students graduate, they begin paying somewhere between 3-5 percent of their annual income toward their tuition without interest  accumulation. Each generation of graduates would finance the expenses of current students through their annual payments, while simultaneously paying their due, and thus the cycle would continue.

Pennsylvania’s proposed plan differs from plans in other states. The initial few billions of dollars would come from a severance tax on the extraction of natural gas, an entity more personalized to our state.

Then, instead of graduates paying out of their income for a set period of time—like 25 years as is proposed in other models—Pennsylvania graduates would pay an annual sum to their alma mater every year until their borrowed amount was paid off in full. This way higher-earning graduates wouldn’t pay out more over a set period of time than their less affluent peers. Everyone would pay their equal share.

Pennsylvania’s version of “Pay It Forward, Pay It Back” seems promising, maybe more so than versions of this plan in other states. And so the plan would go on year after year without a hitch, graduates paying back their owed tuition while simultaneously paying it forward to benefit current students, until tuition goes up.

When university costs rise and tuition as a result increases as well, who pays more? It wouldn’t be fair to ask graduates to pay back more than they owe to finance current generations, and asking current generations to pay the difference up front would defeat the plan’s entire purpose—delaying tuition payment.

We can’t predict the changing of variables that may affect this plan’s future success.

Dr. Douglas Webber, an assistant professor of economics, said this is a concern with any plan that tries to subsidize the cost of education.

“You can’t just assume that you’re going to change a policy and everything else is going to stay the same,” Webber said. “People are going to respond to that and that’s going to change the effectiveness of the plan.”

Perhaps, we’ll say tuition doesn’t increase, but graduates stop making their payments. Graduates don’t have to pay during times of unemployment or if they continue their education after the  undergraduate level, according to the plan. How does the lack of funds collected during this period of time affect current students? The state would have to somehow make up the difference.

Dr. Vivian Ikpa, an associate professor of educational leadership, said she supports a tuition plan to alleviate the burden of debt on students, but she too believes the “Pay It Forward, Pay It Back” plan may have some unintended consequences.

“States may be encouraged to kind of defund many of the need-based grants to throw the money into this program,” Ikpa said. “And that way a lot of students, especially low-income students, may decide they don’t want to participate in this.”

“They may indeed, depending on the plan and how it’s proposed, need other financial means to support additional college costs, such as room and board,” Ikpa added.

It turns out this plan may end up costing students more, especially low-income students who may be attracted to a more affordable school like Temple.

Webber, who testified before the Senate about student loan issues, said a plan like Temple’s ‘Fly in 4’ program is better suited than “Pay It Forward, Pay It Back” to alleviating student debt, specifically for low-income students.

Webber explained it is the category of students who don’t graduate—but accumulate debt—who “overwhelmingly” default on loans.

“They accumulate debt, but they don’t have that degree that helps their earnings later on,” Webber said. “So programs like the Temple ‘Fly in 4’ program that is trying to increase college persistence rates and help people to graduate is a far more effective plan at reducing college debt.”

It turns out Temple is taking on college debt more effectively, according to Webber, than this proposed statewide plan. As for now, it seems to me the best way to limit college debt is to make sure to graduate as quickly as possible.

Knowing this, I’m trying to cut down on costs and potential debt by graduating a year early. Of course, this isn’t an option for everyone, but making sure not to overstay one’s four-year welcome is key.

Regardless of personal tactics to cut costs, I think it is clear the “Pay It Forward, Pay It Back” tuition plan is not as straightforward of a solution as we all may have hoped.

Jennifer Roberts can be reached at or on Twitter @jennyroberts511.

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