New legislation in the works across the country is taking on a student loan system that many see as broken. Whether you agree or not that the current system has flaws, what we can agree on is that the federal government has not been able to push through any significant legislation other than the interest rate law last year which may not turn out to be a win for borrowers. What’s also true is that states are increasingly taking on student loans and are pushing for more aggressive legislation than would likely be possible at a national level.
One legislative notion that seems to be taking hold at the national level is the Pay It Forward concept. Under this scenario, students would be able to attend college for no money out of pocket and would then commit a certain percentage of their income for a certain number of years after graduation. This sounds like paying back, but it is positioned as paying it forward based on the notion that alumni payments would find current and future students.
In reality, this is still debt and it’s not debt at a specified amount that you’ll be able to know at the time you agree to it. This can be a good or a bad thing. If you plan to attend a costlier school and know you’re headed for a lower earning field – social work, journalism, teaching, public service, etc – it could be a definite win. But if you attend a modestly priced school and then earn a mountain of moolah, you’ll be paying back far more than your school would have cost had you paid it directly or taken on student loans.
Below is the list of the states that are considering Pay It Forward (PIF) legislation and details on each plan where we could find them:
California – AB 1456 – This program would see graduates commit 2-4% of adjusted gross income but doesn’t specify a repayment length and says this would be based on the results of a pilot program.
Connecticut – HB 5241 – This bill would see the state conduct a feasibility study on setting up a PIF program and has passed the House already.
Florida – SB 738 – This proposal seems to have died in committee, but ordered the State University System to establish a PIF pilot program.
Hawaii – HCR 129 – This legislation says it would model their program on Oregon’s, but only orders the convening of a task force to study the feasibility of establishing a PIF program.
Illinois – HB 5323 – This legislation has passed one house unanimously and is moving on to the second and a study of other state programs was ordered to determine the feasibility and impact of PIF.
Indiana – HB 1084 – This proposal seeks to explore what the state is calling a “deferred tuition pilot” and asks the education department to consider creating a program.
Louisiana – HCR 21 – This legislation has passed both houses of the state legislature and has been sent to the Secretary of State, directing the Board of Regents to conduct a PIF feasibility study.
Maine – SP 667 – This proposal would direct the University of Maine System to study establishing a pilot program based on Oregon’s PIF program.
Maryland – HB 853 – This bill got a thumbs down from appropriations, but would consider a PIF pilot program and a freeze on state college tuition.
Massachusetts – H 3631 – This bill paired a PIF feasibility study with an offer of discounted student loan interest for students that attend state schools who pledge to limit tuition hikes.
Michigan – HR 301 – This legislation is interesting because it proposes to lean on the President and US Congress to fund state PIF programs. Smooth move!
New Jersey – S 979 – This is an expansive proposal which seeks to study accelerated degrees, more affordable degrees, tweaks to state educations loans and a PIF program.
New Mexico – HM 44 – This legislation directs the Legislative Finance Committee to study Oregon’s PIF program and see how it could be implemented in NM.
New York – A 8562 / S 6420 – This piece of legislation actively seeks to establish a PIF program but doesn’t specify the percentage of income to be paid or number of years to pay it forward.
Ohio – HB 242 – The proposal requests that the Board of Regents consider a PIF pilot program to replace the current state college tuition system.
Oklahoma – SB 2001 – This legislation directs the OK State Regents to consider implementing a PIF pilot program and report back to the legislature.
Pennsylvania – HR 429 – This proposal directs the Legislative Budget Committee to consider the financial impact of a PIF program.
Rhode Island – H 7201 – This legislation would set up a three year PIF pilot program and sets a January 2015 deadline for submitting plans for the pilot.
South Carolina – H 4414 – This proposal would also set up a PIF pilot program and sets a deadline of December 2015 for establishing parameters of the program.
Vermont – S 192 – This legislation would set up a task force to develop a plan to create and implement the state PIF program.
Virginia – HJ 72 – This proposal would have the State Council on Higher Education study the feasibility of a PIF program.
Washington – HB 2720 – This legislation would establish a PIF program in the state, set caps of 3 ½% or 5% depending on type of school and caps repayment at 25 years.
Last year, we covered Oregon’s program that has since inspired a whole roster of state emulators. If they decide to roll it out, it will be a Fall 2016 start with a limited number of participants. A decision is supposed to be rendered this month on whether Oregon will move forward with PIF based on their study findings. We’ll keep you posted when and if state Pay It Forward programs come online.
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