New York State Assemblyman Fred W. Thiele, Jr. has introduced legislation for the 2014 Session that would direct the State University (SUNY) of New York to create a pilot program called the “Pay It Forward, Pay It Back Program” at two four-year state universities and two community colleges in the SUNY system. The program would permit students to attend the participating institutions tuition-free, provided the student agrees to pay a small percentage of their future income for a fixed number of years to a state revolving fund. The state university would set the percentage and the number of years.
To be eligible, a student would have to be a resident of New York State for at least one year, sign a contract agreeing to the payment plan, complete their degree within a minimum period of time to be set by the state university, and apply for federal Pell grant funding and tuition assistance program funding before participating in this program.
If the student fails to fulfill the requirements of the program, the State University would convert the obligation into a student loan equal to the full amount of tuition that would otherwise have been paid. Students would be responsible for other costs such as housing, fees and other non-tuition related charges.
After initial funding by the state through the state budget process, the program would be funded through the future income payments required by the program. These payments would be placed in a revolving fund for the benefits of future students in the program.
“Higher education is the key to success in an increasingly competitive global economy, yet it is becoming more and more unaffordable for the middle class,” said Thiele. “The only type of household debt that grew during the recession is student loan debt. Student loan debt in America exceeds $1 trillion. Americans owe more on student loans than credit cards. That $1 trillion debt amounts to an aggregate wealth loss of about $4 trillion over the lifetime of the borrowers. The average student loan debt for a family headed by two people with four year degrees is $53,000. Young Americans are starting adult life deeper in debt. They delay buying a home or a car, getting married, and having children. It is a burden that could place a drag on the future economy. Student loans are the next credit bubble, with borrowers, rather than lenders as the losers. The number of students in default continues to increase reaching near 10 percent. This legislation can help create an alternative model for funding higher education where students can get their education, contribute to the economy, not be saddled with crushing debt, and help the next generation of students to get their education.”