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February 09, 2012 4:22 PM Buy Now, Pay Later

By Daniel Luzer

In other news from California, some college students have proposed a plan to change the way students pay for college, or at least when they pay for college.

According to a piece by Larry Abramson at NPR:

Under the Fix UC proposal, the bill would not come due until students graduate and start making money. “Under our proposal, students would pay 5 percent of their income for 20 years” following graduation, [University of California at Riverside junior Chris] LoCascio says.
Fix UC recently presented the idea to the university regents. The idea is that students would have a dependable bill to pay, rather than wrestling with unpredictable tuition increases and rising debt.

It’s not the first time someone has proposed an idea like this. Indeed, New Zealand, Australia, and the United Kingdom all support higher education sort of like this.

Instituting such a funding plan would be difficult, however. According to the NPR piece, the proposal, would mean that California’s college funding would operate “essentially like Social Security, in that the earnings of graduates would cover the tuition costs of the next generation.”

It would, perhaps therefore, have many of the same problems that now impact social security. If there are dramatically more college students in future generations, or if working graduates don’t make much money, the system will suffer funding problems.

But it’s worth considering. The current system, after all, has its own persistent funding problems.

“In its current form, it’s frankly unworkable,” explained University of California president Mark Yudof.

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer

Comments

  • Craigie on February 10, 2012 8:03 AM:

    Isn't this similar to the Yale Tuition Postponement Options? Clinton was one of those who repaid. Tsongas did not.

    As the Chronicle has written, "Under Yale's Tuition Postponement Option, graduates had to repay yearly 0.4 percent of their salary for each $1,000 they had borrowed. (Tuition was considerably lower then.) Each borrower had to continue paying until the debt of their entire graduating class was repaid. The program unraveled when high-earning graduates realized they would have to repay far more than they had borrowed, subsidizing not only students in low-paying professions, but the 15 percent of graduates who were deadbeats. Few students realized how many classmates would renege on the loans."

    http://www.slate.com/articles/news_and_politics/chatterbox/1999/02/yalie_crybabies.html

    http://www.yaledailynews.com/news/2001/mar/27/70s-debt-program-finally-ending/