Interesting concept in paying for college....

[The Walk of the Penguin Mich]

www.oregonlive.com/politics/index.ssf/2014/02/washington_looks_at_pay_it_for.html

I heard about this last night while I was listening to the news.  I only heard part of the newscast so had to go looking for what they were talking about.  I have to wonder how something like this would work out, and how it could be enforced.  What happens if you leave the state?

In a nutshell, you get your tuition and fees covered by the state, but afterwards you are obligated to pay a certain percentage of your income back for the next 25 years.  

[Rocky Mtn Saver]

Would the 'pay it forward' obligation be dischargable or nondischargable? 

Also, if a person can't afford to pay for their student loans afterward, even with all the various repayment options, what makes this so much more affordable? 

[justme]

I want to say a long time ago this was discussed on here.

The main problem with that is it's a choice. Those who aren't planning on making as much in their career will opt for this, though those with high paying prospects will just take the loans and pay them off quick with their money.

[Rocky Mtn Saver]

Feb 19, 2014 14:26:20 GMT -5 justme said:

I want to say a long time ago this was discussed on here.

The main problem with that is it's a choice. Those who aren't planning on making as much in their career will opt for this, though those with high paying prospects will just take the loans and pay them off quick with their money.

And what about people who would rack up more than necessary college costs knowing they aren't nearly as much on the hook for it? 

[The Walk of the Penguin Mich]

Students who choose to participate would receive money for their higher education program's tuition and fees, less any financial aid and grant awards.

It sounds like they limit the college costs to tuition and fees. It does not sound like living expenses are paid, which is where a lot of the increased college costs come from.

[justme]

Feb 19, 2014 14:33:56 GMT -5 The Walk of the Penguin Mich said:

Students who choose to participate would receive money for their higher education program's tuition and fees, less any financial aid and grant awards.

It sounds like they limit the college costs to tuition and fees. It does not sound like living expenses are paid, which is where a lot of the increased college costs come from.

I was just going to comment on this myself.

1) So does the percentage drop down by how much of your financial aid and grants you get? What about merit scholarships, does that do it too?
2) It says "up to 25 years", so if you hit the repay amount early due to a high paying job you could be done in 5/10 years?
3) Students would still have to take out loans for room/board. So this would set them up for the 10%/15% IBR for federal loans AND 2-4% for the Pay it Forward payback. That's a larger chunk of their money going out than if they just did loans.

[alabamagal]

Tuition/fees are only part of the cost of college.  All 3 of my kids have full or 90% tuition scholarships.  It still costs them ~$15k per year to go to college.  Their only viable college options are out of town.  They fund their college with help from mom, student loans, som Pell grant, (when 2 or more in college at the same time), summer work and some part time work while in school.

They will each have ~$25k in loans when they graduate. 

I actually saw a program in Texas that does this for Teacher Certification for those with a Bachelors already.  Cost is $4k for 1 year, you pay it back your first 2 years teaching.  You probably have to pay it back if you do not get a job, I didn't get that far into the details.

[HoneyBBQ]

no one would pay for more than 25 years

!!! Good God!

[whoisjohngalt]

I thought you were going to suggest going to prison and getting it for free.  My mistake

[tskeeter]

Feb 19, 2014 14:26:20 GMT -5 justme said:

I want to say a long time ago this was discussed on here.

The main problem with that is it's a choice. Those who aren't planning on making as much in their career will opt for this, though those with high paying prospects will just take the loans and pay them off quick with their money.

Just me is right, since participation is optionsal, a program like this will allow more people to pursue their passion in underwaterbasketweaving.  Trading an expensive college education for a low paying career and a life of virtual indentured servitude.  And burden the taxpayers with yet another high cost program that provides little value.  I'm sure some political rocket scientist envisions these programs as self sustaining, as former students pay back significantly more than their education will cost.  Yeah, and SS was supposed to be self funding.  Only it requires repeated tinkering and tax increases to make it continue to work.

[Deleted]

Whatever happened to saving for college first? Like everything else it's play now and MAYBE pay later?

[cktc]

Isn't this what happens when you default on student loans anyway? You pay a % of income for X many years until it is forgiven.

It would probably work better to separate out the worthless degrees/courses and charge less for them.

[Rocky Mtn Saver]

Feb 19, 2014 17:36:38 GMT -5 cktc said:

Isn't this what happens when you default on student loans anyway? You pay a % of income for X many years until it is forgiven.

It would probably work better to separate out the worthless degrees/courses and charge less for them.

Defaulting on loans and forgiveness based on X years of payment are two different things.  The former is a nondischargable problem, the latter is a legit option. 

[Peace77]

Feb 19, 2014 17:16:23 GMT -5 @lonewolf said:

Whatever happened to saving for college first? Like everything else it's play now and MAYBE pay later?

College expenses have increased far more than just inflation while wages for entry level jobs have remained relatively flat.  It isn't possible to save for 4 years of college first unless it was your parents or someone else did the saving.

It is possible to combine scholarships, grants, working and attending a co-op school to eliminate (or severely reduce) the need for loans.

[The Walk of the Penguin Mich]

Whatever happened to saving for college first? Like everything else it's play now and MAYBE pay later?

Because unless the parent was contributing a significant amount of $$, it's pretty much impossible for a student to pay tuition alone on a minimum wage salary, even if they work 40 hours/week during all their off time while in HS.

Assuming that they get a 10/hour job during the summer and work 40 hours/week, that gives them $400/week or $4800/summer (and that's not accounting for taxes). Since you have to be 16 to be employed, you can only work 3 summers before college, so AT MOST a student would earn $15,000. That *might* pay for the first year of college if the student lived at college, maybe 2 years if he commuted.

When I was an undergraduate, my tuition was $400/semester. Now it is easily 10x that, if not more. Minimum wage certainly is not 10x what it was back in 1980.

[Deleted]

Feb 19, 2014 17:59:51 GMT -5 The Walk of the Penguin Mich said:

Whatever happened to saving for college first? Like everything else it's play now and MAYBE pay later?

Because unless the parent was contributing a significant amount of $$, it's pretty much impossible for a student to pay tuition alone on a minimum wage salary, even if they work 40 hours/week during all their off time while in HS.

Assuming that they get a 10/hour job during the summer and work 40 hours/week, that gives them $400/week or $4800/summer (and that's not accounting for taxes). Since you have to be 16 to be employed, you can only work 3 summers before college, so AT MOST a student would earn $15,000. That *might* pay for the first year of college if the student lived at college, maybe 2 years if he commuted.

When I was an undergraduate, my tuition was $400/semester. Now it is easily 10x that, if not more. Minimum wage certainly is not 10x what it was back in 1980.

This is why I'm so adamant about saving for college for my kids.  My parents never paid a dime and I was able to easily pay as I went and never needed student loans, but it's just not the same any more.  I made $5/hour out of high school and tuition was $32/credit.  Now it's $227/credit at the same school and it's doubtful they're going to get a job making more than $10/hour.

The thought of their wages being garnished for 25 years is sickening, especially if for some reason they don't even finish. 

But, its' even hard for this generation of parents to save because they're still paying on their own student loans!

[cronewitch]

Imagine dropping out of college and landing a minimum wage job then paying 4% for 25 years.

Seems it would be wonderful for someone who didn't intend to ever work much. Disabled people and housewife or someone working for a spouse for free or cheap and people working under the table.

Does the 25 years include years you didn't work or only a little part time job? A SAHP might only earn a tiny bit of money or nothing for a decade or more. People are already saying it cost more to put kids in daycare than the lower income parent makes this would make it more likely to choose unemployment.

What about adult students say a person like me that is 65 and retired can I go to college free then since I never plan to work again?

If a parent gets a degree say in social work then drops out of the work force to raise kids can she come back in 15 years and go to college again?  Say her husband dumps her when the kids are teens and she hasn't worked in 15 years does she then owe it all in 10 years while earning almost nothing?

[thyme4change]

Tuition at this school is $12k per year.  I don't know if there are any restrictions, but it seems like the "debt" wouldn't exceed $50k - and if you are required to apply for grants and aid, it would be even less for the school.

If only a small portion took this option, it wouldn't really change the cost structure of the University.  If 50% of your classes have a large class size, putting in an extra 10% of people who will pay later won't force the university to open a new class.  And if those students pay an average of $1600 per year for the next 25 years, that will be 100% profit.