On the Issues: “Pay It Forward”



The Oregon legislature recently passed a law requiring the state to study a “Pay It Forward” model for higher education. Under the plan, students could attend college with no upfront costs but with a payback over 24 years amounting to 3% of their annual earnings. The state would then use that money to fund costs for students in the future.

With tuition through the roof, it is understandable why students might support a program that promises no upfront costs.

Given the current pressures on state budgets, it is also understandable why the “Pay It Forward” model might be attractive to legislators. It’s not often they can “do something” significant about higher education without offering more public funding.

But as many analysts have pointed out, it is important to think through the implications of the Oregon plan and others based on the “Pay It Forward” model.

Here are just a few questions to consider:

Is this program really “a deal” for students? Or will students wind up paying more than they pay now for loans? (According to a report in the Chronicle of Higher Education, the answer is that they will pay more if “Pay It Forward” becomes a reality (http://chronicle.com/article/Oregons-Pay-It-Forward-Plan/141221/.)

Will such plans make it even easier for states to reduce—even further—their public funding for higher education?

Will such plans give even more impetus to the current shift of costs from the states to individual students?

Searching for better models for funding higher education should be high on the list for all states; but the devil may surely be in the details with the current “Pay If Forward” model.

For more discussion, see also an analysis by Sara Goldrick-Rab at http://www.tcf.org/work/education/detail/pay-it-forward-or-pay-it-yourself/.