Magazine article Newsweek

A Penny Deferred

Magazine article Newsweek

A Penny Deferred

Article excerpt

Byline: Winston Ross

A radical new way to pay for college.

If Oregon Sen. Jeff Merkley has his way, the whole country will soon be considering a new way to pay for college at publicly run schools. Merkley is calling on his colleagues to fund a pilot program that would eradicate much of the crushing debt that not only hampers graduates' ability to pay the rent and buy groceries, but discourages young people from going anywhere near higher education in the first place.

In a roundabout way, the senator got the idea--Pay It Forward--from the founder of a small, nonprofit, public-policy think tank in nearby Seattle. John Burbank, who created the Economic Opportunity Institute 15 years ago, tells Newsweek that he came up with Pay It Forward after watching with dismay the skyrocketing tuition increases in Washington state's public university system. The institute's research shows that, in Washington, tuition costs as a percentage of median household income have jumped from 5 percent in the late 1980s to 22 percent today.

Burbank's solution: turn education financing completely upside down. Instead of borrowing money up front and then paying it back over the coming decades, the state (and other states) could switch to a "pay it forward" model, whereby students pay nothing in tuition and fees to attend school. After they graduate, though, they'd agree to fork over an agreed-upon percentage of their income for an agreed-upon number of years--no matter how much or how little that income turns out to be. …

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