Lawmakers pitch ‘pay it forward’ model to ease Michigan tuition
Michigan legislators have introduced a plan that would allow in-state college-bound students to attend college for free and then, as graduates, pay a percentage of their income back. Known as a “pay it forward” model, the money paid back would go into a special fund to help other students attend college using the same plan.
If passed, the Supporting Michigan and Retaining Talent (SMART) Act would appropriate $2 million to fund a 200-student pilot. Four-year university students would be required to pay back 4 percent of their income for five years for each year they attended school through the program, while community college students would pay 2 percent.
Students whose family income is $250,000 per year or less would qualify, and they would need to maintain a GPA of 2.5 or higher while in college. They would begin repaying the tuition when their salaries put them above the poverty line.
Dropouts would need to pay for their tuition in the same way, beginning the first year they were no longer in school.
“I’ve met several Michigan students who say they don’t want to go to college because they don’t want to go into debt,” says State Representative Theresa Abed (D-Grand Ledge) who sponsored the bill, which is currently being reviewed by Michigan’s Committee on Competitiveness.
“To me the program is a win-win, because instead of paying back a financial institution, or the government, students are paying back interest-free into a fund that will help other students.”
Michigan is one of about 20 states looking at similar college tuition programs, says Carrie Warick, director of partnerships and policy at the National College Access Network.
49%: Students reporting that the financial aid offer was “very important” to the decision to enroll at their institution (up from 34% in 2004). Source: “The American Freshman: National Norms Fall 2013,” Higher Education Research Institute at UCLA, released March 2014.
While the “pay it forward” model would work for some students, there are aspects to consider as the program doesn’t cover all costs, she adds.
“On the positive side, students will know how much they’ll pay before they apply and don’t have to pay up front, and that’s helpful in states that don’t have large tuition programs,” Warick says. “However, if tuition is the only thing that’s waved, the cost of room, board and books could still be a burden for students from low-income families.”