Although the "Pay it Forward" is not a brand-new tuition repayment proposal, a bill supporting its main objective has officially been introduced in the Michigan Legislature.
Originally started by a group of students at UC - Riverside, Pay it Forward would allow students to take out interest-free loans then pay them back once they start their professional career. Michigan is now one of at least 20 other states to consider this proposal in its state legislation, the Detroit Free Press reported.
With the Pay it Forward plan, students take out interest-free loans and agree to pay a fixed percentage of their income over a certain period of time once they land a job in their field. With Michigan's bill, No. 5315, community college students would pay back two percent of their income and university students would pay back four percent.
"The goal is to remove every financial barrier to high education," state Rep. David Knezek (D-Dearborn Heights) told the DFP. "We've increasingly placed the financial burden of college on the backs of the students. 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."
New Jersey, Ohio, Oregon and more than a dozen other states are mulling similar variations of this proposal. College affordability, in general, has even been an item of interest to President Obama since he took office in 2008.
Just recently, he released a proposal that would rate federally funded schools based on performance metrics and disburse government aid accordingly. While many have voiced their opposition for Obama's proposal, state and school leaders have thus far seemed interested in at least taking a close look at Pay it Forward.
Michigan's bill would need two million dollars in start-up money, but the funds post-college students pay back would then go back into the program. The state's Treasury Department would be in charge of tracking the money and overseeing repayments.
Rep. Theresa Abed, D-Grand Ledge helped introduce the bill and called the startup money a "drop in the bucket when you consider the payback and benefits."
One of the many financial concerns for students with a large load of loan debt is the likelihood of not making buying a car or a home or having children and other major financial decisions.
"With disinvestment in higher education by states, there's tremendous financial pressure on students," John Burbank, executive director of the Economic Opportunity Institute in Oregon, told the DFP. Burbank has been a major proponent for Pay it Forward.
"When they take out large loans, trying to pay them off can really hurt their ability to do other things," he said. "The percentage you'd have to pay is predictable and predetermined. You don't have to worry about interest rates fluctuating. It's all locked in."
