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Paying for College - Study Now, Pay Later Idea Sparks Interest in Maine
11/22/2013   Reported By: Jay Field

Imagine if you could go to the University of Maine and not have to pay any tuition up front. That's the basic idea behind Pay It Forward, a proposal to make college more affordable that's getting a lot of attention in a growing number of states across the country. Two bills due to come before the Maine Legislature in Janaury suggest studying the idea, which would ask students to pay up to 3 percent of their income after college - for up to 20 years - in exchange for free tuition. As Jay Field reports, the idea poses some difficult financial challenges, but has higher education officials and college students intrigued.

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Growing up in Manchester, just outside of Augusta, Maggie Keeley says she and her parents would talk about college and how the family planned to pay for it.

"They basically told me that they would pay the tuition for UMaine, but if I went anywhere else, then I would have to pay the difference," Keeley says. "That's sort of been the deal since I was younger."

Keeley, who's now a freshman at UMaine, says her parents have kept their end of the bargain. But what they're able to pay is still not enough to cover all of what it costs to go to school in Orono. And Keeley says it's unlikely her parents will be able to up their contribution in the coming years.

"I have two younger sisters that are in high school right now. So, when they go to college, it will definitely be a sacrifice to help all three of us," she says.

To cover what her parents can't afford to pay, Keeley has scholarships. Next semester, the nutrition major hopes to get a job at a hospital in Bangor. And Keeley has student loans. She says she's already concerned about how much money she'll owe when she finishes up in Orono. Keeley is hoping it will be around $20,000.

Jay Field: "If I said to you that there was a program like Social Security that would let you go to college for free, but then you'd have to pay it back.

Maggie Keeley: "If I had the choice, and I knew if would work, then I would do it, yeah."

In Maine, the average college senior graduates with a little over $26,000 in student loan debt, and the Legislature is poised to study ways to offer some relief. The concept is called Pay It Forward. It's the brain child of the Economic Opportunity Institute, a Seattle-based nonprofit.

It's executive director, John Burbank, says the idea for Pay It Foward grew out of the financial downturn, when declining state funding for public universities and rising tuition conspired to make college less and less affordable for middle and low income students.

"We thought we needed to develop a way that would actually open access to public higher education and eventually be a self-sustaining model," Burbank says.

Pay It Forward would be a little like Social Security, in reverse. Students would attend two- or four-year public universities for free. In return, Burbank says they would be asked to pay up to 3 percent of their earnings, over a 20-year period "to a public higher education trust fund to enable the next generation of students that same free access to college."

"It's a really intriguing idea. I think it's the right kind of conversation to have. Ultimately, what it's going to come down to are the nuts and bolts and what the cost really is," says Rosa Redonnett, chief student affairs officer at UMaine.

The start-up costs for such a system would likely be substantial. And Redonnett questions how Pay It Forward would work in a state like Maine, with it's small population, low wages and employment struggles.

"Say somebody comes out and they don't have a job. Or they have a low paying job. How does that percentage work?" Redonnett asks.

In-state tuition at the University of Maine is $8,370 a year. So let's say a student goes to UMaine for four years, graduates, gets a job and goes on to make median income in Maine - according to the U.S. Census - for the next 20 years. Under that scenario, a three percent annual contribution to a Pay It Forward-type program would fall roughly $11,000 short of the more than $33,000 it cost the state to educate that student.

John Burbank acknowledges that the concept raises many financial questions that need to be answered. Start-up costs, he suggests, could be funded by bonds, and states could ramp up programs slowly.

"We don't need to make this a universal system immediately," he says. "We can start with a relatively small pilot project. And then the contributions from the graduates tend to grow the pilot project to scale, over a period of 10 to 15 years."

That's what Burbank hopes to see happen in Oregon, where the legislature passed a bill over the summer, calling on state education officials to study options for a Pay It Forward pilot program and how it could be implemented.

And lawmakers in at least eight other states, including Maine, are pushing bills that call for studying the concept. State Sen. Roger Katz, an Augusta Republican, is sponsoring one of them.

"As we try to make ourselves competitive as a state, with other states, it would be shortsighted not to at least take a look at this idea," Katz says.

As part of its strategic plan, the Lumina Foundation, which focuses exclusively on higher education, wants to see 60 percent of all Americans attain a college degree by the year 2025.

Maine has a long way to go to meet that goal: Roughly 26 percent of state residents have college degrees or other higher level credentials. Maine Senate President Justin Alfond says it's the lowest rate of post-secondary educational attainment in New England.

"We also have the lowest wages in New England," Alfond says. "There is a correlation between our wages and the lack of those that have degrees to make sure that we can move our economy forward."

Alfond says it's a major reason he's joined Sen. Katz in proposing a bill to study Pay It Forward. The Education and Cultural Affairs Committee will likely hold hearings on both measures, when the Legislature reconvenes in January.


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