Building an Economy that Works for Everyone

Who should pay for higher education in Massachusetts?

In 2013, UMass agreed with the Massachusetts state legislature to freeze tuition so long as the state provided adequate higher education funding. Just two years later, the state hasn’t held up its end of the deal and UMass has had to increase tuition. In fact, tuition at UMass has increased $3,313 since the start of the recession, and state funding per student in Massachusetts has fallen 23%.

As Evan Horowitz of the Boston Globe points out, this is not a problem unique to Massachusetts.

All over the country, you see the same pattern. State support for public education is going down, and the shortfall is being made via rising tuition — which also means mounting student debt.”

As a result, Massachusetts – like many other states – is looking for innovative ways to fund higher education. Over the last two sessions, for example, the legislature has been exploring Pay It Forward. This year, two study bills were introduced. Rep. Jeffrey Roy introduced House Bill 1062, and Rep. Tom Sannicandro introduced House Bill 1068, both of which would establish a team to study Pay It Forward in order to determine the costs, practicality, and how best to implement it.

Under Pay It Forward, students would attend college tuition-free, then contribute a small percentage of their income after graduating. Their contributions are then used to fund the next group of students. With no minimum payments, and no interest, Pay It Forward has the potential to relieve students from the kind of crippling debt burdens they’re left with under the current system. And because Pay It Forward becomes financially self-sustaining after one generation of contributions (about 20 years), lawmakers across the country see it as an intriguing solution, especially as states continue to cut funds for higher education and students are increasingly saddled with ever-growing tuition bills.

Horowitz thinks Pay It Forward might be worth considering (emphasis added):

“What distinguishes “pay it forward” from a traditional loan program is that students don’t owe a fixed amount; they owe a percentage of their salary. So graduates who go to Wall Street end up paying more (because they earn more) while those who follow less-remunerative paths pay an amount they can afford. Moving to a “pay it forward” model would bring big, up-front costs because it takes years before the first cohorts graduate, get jobs, and start paying back. But if the state is relinquishing its role as the lead funder of higher education, and if students are being asked to pick up the slack, we should think about the best, fairest way to make that transition.”

Read the entire article here.

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