Title

Pay it Forward

Presenter Information

Colby Elshoff

Document Type

Oral Presentation

Location

SURC Ballroom C/D

Start Date

15-5-2014

End Date

15-5-2014

Keywords

Tuition, Loans, College

Abstract

An initiative called Pay It Forward has been introduced in various states by the Economic Opportunity Institute (EOI). The idea behind the initiative is to change the way students pay for public college and ultimately make public college more accessible for students. The initiative takes a different approach to paying for college than traditional loans. Students pay no tuition or fees upfront, instead after graduation, students pay a certain percentage of their Annual Gross Income (AGI) for a specified amount of time. Currently, the payback period is being discussed as 20 or 25 years, and the equity stock or percentage of student’s income that they are required to pay is being discussed as 0.75 to 1 percent per year of college. A cohort study is used to assess the initiative Pay It Forward from the student and state’s perspective in Washington state. Factors such as median time to graduate college with a four-year degree, average cost of tuition and fees, tuition inflation, Washington State’s borrowing rate, starting or entry level salary for a 2014 graduate, annual salary increases, salary inflation, and population growth are used in assessing the initiative. The ultimate question is whether it is cost effective for states to move forward and bear the burden of college tuition and fees. If not, then what variables or factors need to change to make it feasible such as higher starting salaries for grads, larger percentages of income for repayment, or longer payback periods are a few examples.

Poster Number

56

Faculty Mentor(s)

Wassell, Charles, Jr.

Additional Mentoring Department

Economics

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May 15th, 2:29 PM May 15th, 5:00 PM

Pay it Forward

SURC Ballroom C/D

An initiative called Pay It Forward has been introduced in various states by the Economic Opportunity Institute (EOI). The idea behind the initiative is to change the way students pay for public college and ultimately make public college more accessible for students. The initiative takes a different approach to paying for college than traditional loans. Students pay no tuition or fees upfront, instead after graduation, students pay a certain percentage of their Annual Gross Income (AGI) for a specified amount of time. Currently, the payback period is being discussed as 20 or 25 years, and the equity stock or percentage of student’s income that they are required to pay is being discussed as 0.75 to 1 percent per year of college. A cohort study is used to assess the initiative Pay It Forward from the student and state’s perspective in Washington state. Factors such as median time to graduate college with a four-year degree, average cost of tuition and fees, tuition inflation, Washington State’s borrowing rate, starting or entry level salary for a 2014 graduate, annual salary increases, salary inflation, and population growth are used in assessing the initiative. The ultimate question is whether it is cost effective for states to move forward and bear the burden of college tuition and fees. If not, then what variables or factors need to change to make it feasible such as higher starting salaries for grads, larger percentages of income for repayment, or longer payback periods are a few examples.