Exchange tuition for a small percentage of future income: report
Imagine going to university without paying tuition up front and committing instead to paying a small percentage of your future income so that others might so the same.
That what the the Economic Opportunity Institute's so-called "Pay it Forward" plan aims to do, all the while erasing the financial and psychological barriers that keep some lower- and middle-income students from going to higher education.
Under the program, students pay no upfront tuition fees to attend school. Instead, they pay a small percentage of their adjusted gross income for a number of years after graduating: 0.75% per year of community college, or 1% per year of university, for 25 years.
Payments are placed in a trust fund that covers the cost for future students to receive the same opportunity to attend university with no tuition fees – hence, the Pay It Forward concept.
The plan has been described as "Social Security in reverse" with students getting the benefit of a higher education and then paying for it during their working life. It's a real change from the current system of cobbling together college tuition money.
Would it work? Well, it has, on a smaller scale to be sure in Australia and the United Kingdom.
And who would pay for it at the outset?
Would such an approach work in Canada? Would you support it?
By Gordon Powers, MSN Money
Posted by: B | Nov 14, 2021 12:25:36 PM
The idea is nice provided that the student can actually find a job after graduation. Some useless degree like... philosophy will never pay back the tuition cost because you can't find work in your field. Some students stay perpetually in school collecting degree and cannot find a job in their field.
Posted by: SP | Nov 14, 2021 9:07:19 PM
I can't think of a better way of improving the quality of post secondary education in Canada though, unlike the system in the UK it should be underwritten by the Universities and their pension funds directly and not the government.
For far too long the Profs and Administrators have paid themselves salaries way beyond their net benefit to society relying instead upon a credentialist society to cover their failings.
So.... when can it start?
Posted by: RW | Nov 16, 2021 3:17:57 PM
This is a very complex issue and it's not all about who pays or, at least, it shouldn't be. I don't pretend to have all the answers but this is what I do know. Under this "Pay it forward" program only lower- and middle-income students would benefit - in theory. First, I would suggest that such a program would be considered discriminatory. Second, to implement the program would involve some kind of objective needs analysis. And because of one and two,the whole process would be open to abuse.
There are many avenues for students seeking to obtain a higher education; bursaries, scholarships,and co-op programs (the employer pays for the education) to name but a few. The latter has been highly successful in training skilled professionals in the high-technology and aerospace industries. These kids walk away with a masters and/or a PHD if they are up to the challenge.
"Pay it forward" has a negative connotation from where I'm sitting. It sounds too much like "Kick the can down the road" because without a balanced and disciplined approach that addresses not only the students needs but the needs of a society and a nation we are simply creating another future obligation for a world already up to its neck in debt. Any suggestion the government should pay such a program is a none starter. To suggest a university's pension plan should fund the program, is not feasible nor would it be legal (investments in a pension plan are definitive: assets must be investment grade or higher, Pref shares P2 or higher, x- percent in bonds,etc).
In the final analysis, I don't believe an education alone guarantees a paycheck. Why assume it will?
Posted by: JO | Nov 17, 2021 1:28:39 PM
Sounds interesting, agree with RW. Logistics need to be ironed out, but to me, one cannot look at a new way of funding without reengineering the cost side of the equation as there is a serious issue there.
Exploding admin expenses and salaries/benefits, lavish campuses built on huge debt, and many schools now actively targeting foreign students in order to charge higher fees and putting Canadian students second are emerging themes...fix the model and lower the costs, then look a new way to fund it. Quite frankly, education costs are soaring at several times CPI and far in excess of the meagre inflation adjusted income of the general population. It is a major issue and deeply regressive - most who complain about students were lucky to have mommy and daddy pay for school or went to school themselves a long time ago when their incomes still bought them an education without massive debt.
Ulimatley, it will come down to whether enough people support this new way of funding and quite frankly, there are too many hands being fed by the student debt bubble and exploding tuition bills to try and stop it as it is - we would need a full on collapse of the financial system in order to set a new system in place. Special interest rule the day for now.
Posted by: Neil | Nov 17, 2021 2:55:07 PM
Sounds like a great idea. Some people have issues with whether "useful" degrees would be chosen by students, but I think that overall, having people do what they want to do will make them more successful than if they had not gotten the degree.
In the early stages of such a program, we might address these concerns by limiting the initial courses covered by the program to ones with the highest graduate employment rates, provided that the eligible courses are gradually expanded.
Of course there will be some serial learners, but while some people languish in education as a way to avoid life, the vast majority learn for the sake of learning and self-improvement. If a student studies for ten years, then his/her contribution period will begin later, and will likely be a higher amount than if one degree or no degree was ever taken.
We might address dropouts by preventing the student from taking on a new program until and unless the previous programs have been completed. A dropout should still be liable for the "Thank you for my education" tax for 25 years regardless of success level. I think it is perhaps better to allow people to drop out of a program they realize is not working for them and to switch to something they think would suit them better.
I think this would need to begin as a charitable venture, or with a philanthropy grant, because it would obviously take some time before "Thank you for my education" tax payments began to come in.
Perhaps treating it as a scholarship fund is the best way to frame it. As a graduate of the program, I'd be able to think of it as helping others get the scholarship I had benefited from, rather than a 25 year debt. I think I would be so used to paying the proportion of my income that after 25 years I would continue to contribute voluntarily. Am I the only one?
I think that there ought to be a clause where you cannot opt out of the payments for 25 years, but you can thereafter.
Education benefits everyone, because knowledge has a knock on effect.