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Bill would alter college debt system


A group of state legislators is looking for innovative ways to make college affordable, and one bill could radically alter the way students pay for college in the state.

This state could join a growing number of others, including New York, Oregon and Washington, in considering implementation of a “Pay It Forward” system in higher education funding.

The model would deviate from the traditional way of paying for college — paying semesterly and alleviating the costs with loans and grants — to a system that would cost students nothing during their years at school but would be paid for out of their post-graduation income. The paycheck deductions would be about

3 percent and continue over the course of 20 to 25 years.

“The idea of it I think is phenomenal. I think it could be transformational,” said Del. Kirill Reznik (D-Montgomery), one of the bill’s co-sponsors.

The Pay It Forward model would sustain itself in the long term, Reznik said, as graduates paying into the system would be covering the cost for current undergraduates.

The bill would not implement the Pay It Forward system if passed, but it would authorize and require the University System of Maryland to study the impact and feasibility of moving toward this type of program.

“It’s a great, innovative idea in order to make college more affordable for everyone,” Del. Alonzo Washington (D-Prince George’s said. “Maryland has worked extremely hard to keep tuition down here, in the state of Maryland, in our public universities, but I think we can do more.”

Reznik said that with a Pay It Forward program, students are free to opt out and pay for college by traditional means, but the proposed system could help keep students from graduating college with a high debt burden.

“You don’t have to have this burden sitting in the back of your head about, ‘How am I going to make my student loan payment?’” Reznik said.

However, the Pay It Forward system is ambitious, supporters and opponents said, and has yet to be implemented anywhere in the country.

The biggest concern is the financial implications of starting this type of program, Reznik said, and while the program could be innovative, “the financial questions are huge.”

This program is “not easy to implement or cheap to implement,” Reznik said, “Because there are huge up-front starting costs, if you can imagine, because that first group of students or first several groups of students that go into school, there’s nobody paying into the system behind them.”

The University System of Maryland, which ultimately would be tasked with studying the impacts of a shift to a Pay It Forward model, is skeptical of making such a drastic change. P.J. Hogan, the university system’s government relations vice chancellor, said that while it sounds like a great idea, the initial costs are exorbitant.

“On the front end, someone would have to provide the money to provide the education, and no one’s identified who that would be,” Hogan said. “The state doesn’t have that kind of money; the state’s looking at cutting our budget as is.”

Hogan, however, said despite the concerns about costs and a complicated implementation, he wouldn’t be averse to the system studying what the impacts and challenges would be, as the bill only looks at green-lighting a study, not outright implementation.

“We’re happy to look at it if that’s what the legislature wants,” Hogan said, but there are many questions.

In October, as a model for this program was first discussed in the Oregon state legislature, 11 education organizations including the AFL-CIO, The Education Trust, the American Association of State Colleges and Universities and the American Federation of Teachers, came out in opposition to the idea, arguing that it does nothing to reduce the cost of college or the trend of states cutting higher education funds.

“This legislation puts an additional burden on individual students, reinforcing the concept of higher education as an individual transaction separate from the community,” a statement by the coalition said. “Pay It Forward suggests erroneously that each class of students will effectively cover the cost of college for those who come after them, essentially opening the door to the even more rapid privatization of public education.”

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