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Michigan democrats announced a proposal to change the way public universities fund.  The plan suggests that students pay nothing for college but then pay 4 percent of their earnings for twenty years (or 4 percent for each year of college they attend).  In essence, once students graduate and are earning money they will pay it back to the state.  The money paid back to the university system will pay for students who are in school.  The program will begin with 200 high school graduates each year initially until there is a large enough of pool of college graduates to support more entering freshman.  

If they can make this happen, and I sincerely hope they do, this is an important step in college access.  The cost of college no longer becomes a factor, and the burden of student loans becomes relative to potential earnings rather than a static number.  The math is more logical with this plan, although it will require an up front investment and long-term view.  

.  Take for example two majors: Sociology and Electrical Engineering

Major: Sociology

Average total earned salary in first 20 years    $1,267,000
Four percent of earnings for 20 years     $50,680

Major: Electrical Engineering
Average total earned salary in first 20 years $2,011,140
4% of earnings for 20 years $80,445.60   

By having students pay for college after they finish, students pay for their education and then some but aren’t burdened by starting out with enormous student loans that need to be paid back regardless of their actual income.  This plan allows students to major in their passions and not make decisions based on upon the threat of large debt.  A plan such as the one proposed is likely to increase college graduation (many people leave or don’t enter college because of the high cost) and better serve the community.  My fingers are crossed for Michigan and other states such as Oregon which are considering similar proposals.  Now, if the lawmakers around the country would get on board.
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Comment Preferences

  •  Makes a lot of sense.. Snyder will oppose this (2+ / 0-)
    Recommended by:
    elwior, Sylv

    as will all of the Republicans, who only care about squeezing as MUCH money as they can out of the students, and handing that over to their campaign contributors - like, banks, etc...

    America's LAST HOPE: vote the GOP OUT in 2014 elections. MAKE them LOSE the House Majority and reduce their numbers in the Senate. Democrats move America forward - Republicans take us backward and are KILLING OUR NATION!

    by dagnome on Fri Feb 14, 2014 at 02:06:59 PM PST

  •  Let them Oppose it (1+ / 0-)
    Recommended by:

    Please do, because they just keep making real people see who they REALLY are!

    What I see is people are slowly beginning to think in concepts of solutions forward. It will escalate I trust that!

  •  Tipped and rec'd; thanks for reporting this (1+ / 0-)
    Recommended by:

    Love one another

    by davehouck on Fri Feb 14, 2014 at 02:32:12 PM PST

  •  Is it 4 percent for each year of college (2+ / 0-)
    Recommended by:
    Lawrence, Sylv

    or 4% overall? B/c 16% of salary over 20 years is a lot of money.

  •  Twenty years is too long to be tied to a debt (1+ / 0-)
    Recommended by:

    This is a terrible idea if it doesn't include an accelerated payment option. Perhaps a twenty year mortgage on earnings is acceptable to many, maybe even the vast majority, of college students in Michigan, but it sure would't be acceptable to me. I'd want the option of doubling up on my payments and getting rid of the debt faster.

    I don't like debt. Never have. We don't carry credit card debt from one month to the next, and we pay cash for our vehicles. If there's a big purchase we want to make we save up for it. We only use debt when we absolutely must, e.g., the mortgage on our house. There's no way I'd want to saddle myself with an open ended twenty year debt.

    •  Good point (2+ / 0-)
      Recommended by:
      elwior, Cassandra Waites

      I agree that 20 years is a long debt, but currently students are paying much higher loans than this would cost most students for much longer.  But, yes, there should be some kind of early payment available.   The plan isn't without flaws.  As far as I can tell, none of the current plans are, but in policy baby steps maybe all we can do.  The focus here is to allow students to get through without incurring $100K + in debt that burdens them regardless of the income they actually earn.

      ------ Enjoying the gift of an ordinary day

      by DocRunning on Fri Feb 14, 2014 at 02:49:34 PM PST

      [ Parent ]

    •  The problem with accelerated plans (from the (7+ / 0-)

      standpoint of the colleges) is that many people tend to make more money the longer they're employed.  4% of that 20th year might be equal to 20% of the first year.  On the other hand, it might not, if the economy goes south and you become unemployed.

      The point of a longer term arrangement (and I'm not sure I'd call it a 'debt') is that they take the same chances you do for what is essentially your career.  If your career sucks for 20 years, the college gets squat.  If you become a hedge fund manager, they make out like a bandit.

  •  The other good thing about this plan (6+ / 0-)

    is that it strongly incentivizes colleges to help their graduates find work.

  •  Very, very glad to hear this idea is gaining (0+ / 0-)

    a measure of traction around the country.  When I was running for State Senate in '02, a variation of this was a significant part of my policy statements. Besides the obvious benefit of having people able to start their lives without being massively in debt, there is the added benefit that people who believe they have a future and who are working towards that goal will 1) likely focus and graduate from HS (and then college) and 2) stay out of trouble with the law.  Given that the massive amounts of resources wasted in locking people up in jail who forever become a drain on society as a result will go away - this program will quickly prove, on many levels, to be a blessing on our country.

    Good Sense is Seldom Common

  •  Students still badly overcharged. College Tuition, (0+ / 0-)

    similar to American Health Care is multiples of the price of the rest of the industrialized world - no amount of gimmick financing will change this. The housing bubble was the first to burst, but it will not be long before the Health Care, College Tuition, and Credit Card Bubbles also burst.

    I voted with my feet. Good Bye and Good Luck America!!

    by shann on Fri Feb 14, 2014 at 06:41:28 PM PST

  •  This has a number of problems. (1+ / 0-)
    Recommended by:

    Some could be fixed by making it federal (i.e. tax jurisdiction issues, small pool, incentives to study high-earning majors out of state.)

    Others, such as student competition for high-earning majors internationally and perverse incentives for non-cash compensation may not be.

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