If Oregon Sen. Jeff Merkley has his way, the whole country will soon be considering a new way to pay for college at publicly run schools. Merkley is calling on his colleagues to fund a pilot program that would eradicate much of the crushing debt that not only hampers graduates’ ability to pay the rent and buy groceries, but discourages young people from going anywhere near higher education in the first place.
In a roundabout way, the senator got the idea—Pay It Forward—from the founder of a small, nonprofit, public-policy think tank in nearby Seattle. John Burbank, who created the Economic Opportunity Institute 15 years ago, tells Newsweek that he came up with Pay It Forward after watching with dismay the skyrocketing tuition increases in Washington state’s public university system. The institute’s research shows that, in Washington, tuition costs as a percentage of median household income have jumped from 5 percent in the late 1980s to 22 percent today.
Burbank’s solution: turn education financing completely upside down. Instead of borrowing money up front and then paying it back over the coming decades, the state (and other states) could switch to a “pay it forward” model, whereby students pay nothing in tuition and fees to attend school. After they graduate, though, they’d agree to fork over an agreed-upon percentage of their income for an agreed-upon number of years—no matter how much or how little that income turns out to be. The money would go into a trust fund that would at some point be used to fund education.
To work, Burbank acknowledges, his idea would require a revamp of tax codes or federal Department of Education rules, or both, to ensure that graduates make good on their pledge. It would also take years for the trust fund to accumulate enough cash to actually start paying for higher education. In the meantime, someone would have to subsidize the program. In Washington state alone, this would cost $650 million for the first year and $1.4 billion by the fourth year. At that point, however, the forward-paying would begin, and that number would start to head in the other direction.
“It becomes a social insurance program,” Burbank says. “It enables a much bigger cohort of students to access higher education, but it goes way beyond that, creating a public higher-ed trust fund that enables the next generation to participate.”
It’s a pretty wild proposal, but it’s spreading, at least in some circles. After an economics class at Portland State University learned of the idea, the students and their teacher helped convince the Oregon Legislature to sign off on a pilot program. Now, Merkley wants Congress to back pilot programs across the country. Of course, naysayers have piped in to question whether Pay It Forward has even the remotest chance of working, much less whether Washington would actually approve it. But Social Security and Obamacare were big ideas, too. And now they’re law.