The Oregon legislature has passed its Pay It Forward bill, which creates an alternative model for funding higher education by students agreeing to pay a percentage of their post-graduation income back to the state. When I first heard about, I said I didn’t know what to think. It’s creative but also seems too easy. Matt Reed provides some objections to the plan that I think are worth noting:
- Obviously, in the interim between now and payback time, the state would have to pony up far more money than it currently does. Unless I misread the politics of it, that isn’t likely.
- The political impulse, over time, would be to phase out the state subsidy altogether, and to shift the entire cost burden to students. (Admittedly, this objection is vulnerable to “as opposed to…?”)
- Higher education would be subjected even more strongly than it already is to the vagaries of economic cycles. Since recessions hit the young hardest, and this tax would mostly hit people from their early twenties to their early forties, the hit to college budgets in recessions would be magnified.
- Students are stubbornly heterogeneous. (The positive term for that is “diverse.”) How would this work for part-time students? What about students who go back to college at age thirty? What about students who go on to graduate school and don’t make meaningful money for eight or ten years out? Transfer students? Students who repeat courses?
- Scholarships could become irrelevant. Why a state would want to replace privately donated money with its own is beyond me, but there it is.
- If you think financial aid is administratively complex now, just imagine verifying the income of graduates ten years out who have every incentive to lie. In the absence of some sort of unit record system, good luck with that.
- High-earning students would resent what they perceived as overpayment. (I’m told that this was the experience in Australia, which actually tried something like this.) Since high earning tends to correspond to high influence, I’d expect to see disgruntled high earners use their clout to minimize their obligations. To the extent that they succeed, they hollow out the cross-subsidy that would have paid for all those grad students and stay-at-home parents.
There are additional good points as well. Other points I’m less worried about. I am skeptical that most students who want to end up in wealthy fields will think ahead far enough to go out of state to avoid this plan–if they are planning that far ahead, they probably won’t go to the University of Oregon anyway. But I think this plan passed so easily in Oregon precisely because it was so vaguely sketched out. In the end, like everything, it’s going to take real choices by politicians who don’t like to make choices.