How to make college affordable? Pay It Forward

payitforwardAmerica’s status as a world power has emerged side by side with the expansion of public education. From 1910 to 1940, the U.S. led the world in the expansion of universal, publicly-funded secondary schools. Following the growth of public high school, the percentage of Americans with a high school degree went from less than 25 percent in 1940 to almost 90 percent today.

Post-secondary education also saw a major expansion in this period, notably with veterans from World War II and Vietnam who attended college using the G.I. bill. Even so, a hard-working high school graduate could still find a way into the middle class through plentiful manufacturing jobs with good wages and benefits. But today, American manufacturing has become heavily automated, requiring fewer workers with more advanced skills

Complete College America estimates that to meet projected demand in 2020, we need to double the percentage of Oklahoma workers with college certificates or degrees. Post-secondary education has become as essential to new generations as high school was to our parents and grandparents.

Yet even as its importance grows, college is becoming less affordable. The cost of tuition has risen 1,120 percent since 1978, an increase four times greater than inflation. Oklahoma’s leading public universities remain relatively affordable, but they too have hiked tuition in recent years to compensate for declining state funding.

Need-based scholarships and student loans are imperfect solutions to a basic mismatch – Americans need college education to get a well-paying job, but they must pay before they can earn the income that allows them to afford it. For many young Americans from poorer families who can’t rely on support from their parents, it’s a Catch-22.

“Pay It Forward,” a new model for tuition being developed in Washington state, offers a way out of the trap. From the Economic Opportunity Institute:

Under Pay It Forward, students pay no upfront tuition fees to attend college. Instead, they pay a small percentage of their adjusted gross income (AGI) for a number of years after college: 0.75% per year of community college, or 1% per year of university, for 25 years. Payments are placed in a trust fund that covers the cost for future students to receive the same opportunity to attend college with no tuition fees – hence, “Pay It Forward”.

So for example, a student could attend four years at a university, paying nothing upfront, and then contribute four percent of her income for 25 years after graduating. Or someone could attend two years of community collage and pay 1.5 percent of his income.

Besides making college more accessible to everyone, the Pay It Forward system would prevent payments from exceeding ability to pay, and it would empower graduates to pursue the work best suited to their passions and skills – for example, a career in teaching or non-profits would no longer be prohibited by the need to pay off large student loan bills.

Pay It Forward would require a start-up investment as the first graduates go through the system. While that may not be feasible all-at-once statewide, it could be done by converting existing scholarship funds on pilot campuses. Contributions would build over time, enabling colleges to expand to an ever larger number of students.

Another option is to implement Pay It Forward for the most needed career tracks. For example, we could combat Oklahoma’s looming physician shortage by moving medical schools to the Pay It Forward model.

The United States’ prosperity in the 20th Century rested on a foundation of broadly accessible, high-quality education. But with the global economy becoming more competitive, we can’t be complacent. Pay It Forward could help carry this tradition into the next century.


Gene Perry worked for OK Policy from 2011 to 2019. He is a native Oklahoman and a citizen of the Cherokee Nation. He graduated from the University of Oklahoma with a B.A. in history and an M.A. in journalism.

8 thoughts on “How to make college affordable? Pay It Forward

  1. Something needs to be done. However, the person with a disability who needs an ADA accommodation at the University level is struggling already to attend college. Many times they have extra financial stresses because of paying for medicine or other important things for health. The world does not want to follow the ADA correctly and so often even with University education they get the worst paying positions or none. University is not a ticket to a nice career for the healthy or disabled. Many times the disabled are not even given career chances even with a college degree. Often life is very unfair and complicated. Stigma exists when it comes to having good careers for the disabled who require some kind of an accommodation so it is a lot tougher to compete. A percentage of income taken away might cause a burden for someone with chronic illnesses.A hardship that is often not understood by those who have never had a disabling illness. Never had to struggle for what others take for granted. It is very very hard to have an kind of career for most disabled who have chronic illnesses.

  2. This is an interesting concept. In addition to some needed tweaking (AGI needs to serve as only one indicator in a list of possible indicators of income since not all those employed are wage earners, for example), the trust fund could be tied in some proportional way to the college from which the student has graduated to provide additional incentive that college to provide the best education possible so that the student can become successfully employed after graduation.

  3. Students with disabilities in a Pay It Forward program might need some special policy accommodations created for them – but the need to create those should not be an excuse to derail the whole program.

  4. From an economics point of view this is such a bad idea that it is staggering. First, the whole system will go down in flames if returns on the escrowed funds are not as high as expected. This is largely why companies have stopped using defined benefit retirement plans. Next, there is a huge moral hazard – the less you expect to make after college the more it will make sense to go to college and the more money you expect to make the less likely you will want to take advantage. Moving along, the proposal treats productivity as exogenous to innate capability…in other words it assumes that the folks that would choose to go to school under this system but not otherwise are going to be highly productive with an education. Coming in for a landing, it does not address a likely increase in dropout rates and how they would be paid for. And rolling up the gate, at a conceptual level this is the same as borrowing money to go to college – it doesn’t really solve anything at all. My point of view on this is that the crisis isn’t “not enough people go to school”, but that we’ve gotten to where most smart people do go to school. Just like how labor gets expensive during industrializing when you run out of farmers to move to the city.

  5. What is being done now, is not working, so yes, a different plan needs to be looked at and possibly experiment to see the outcomes or the possbilities.

  6. Hi there,

    As a representative of PIF Danemark and writer of “Your Unique Pay It Forward Story”, please accept my congratulations for writing such a great article giving valuable exposure to the Pay It Forward movement.

    I will look at contributing to your guest blog one day as I’ve just read the guidelines.

    Take care.

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