The Michigan legislature has introduced a new program that would provide students with free tuition, but, of course, there’s a catch.
In return for free tuition, after a student graduates and begins earning above the poverty line, they have to give up a percentage of their income for a specified number of years. That is assuming, however, that the students part of this program actually get a job after they graduate.
The money taken from graduates’ incomes would recycle back into a special fund that would then pay for other college students’ college bills. This legislation is currently being considered by several other states, and the University of Michigan has decided to implement this as a pilot program, in which they will have $2 million to fund 200 students’ educations.
For five times the amount of years that they attended college, students who attended a community college would have to pay 2 percent of their income, and those who attended four-year universities would have to pay back 4 percent of their income. So, under this program, a student who received free tuition for four years at a school such as University of Michigan would have to pay back 4 percent of their income for the next 20 years.
In theory, this is a tremendous effort by the Michigan legislature to alleviate students of the pressure of financing their education. Spreading these payments over 20 or 25 years would help those students who can’t afford to pay the price of college in one lump sum. Additionally, linking the payment rate to earnings would protect borrowers when they face hard economic times as having to pay back large student loans can really hinder a student’s potential for success after they graduate.
However, students who leave college making a high salary in the labor market could be burdened by having to pay back many times the cost of his or her education, receiving no compensation for the extra amount they have paid.
Since this program is tied to incomes, those who expect to earn a lot in the future may decide not to participate. However, those are the people that this program would want to participate, as they are the ones who will ensure keeping it afloat. In the same regard, those entering this program with lower paying job prospects run the risk of spiraling this program into the ground.
And what if the economy goes down the drain again and the unemployment rate soars? Well, they haven’t figured that part out yet.
Large universities such as University of Michigan and Boston University are run like businesses, and to keep getting better and remain on the top of the totem pole, they need to capitalize on high tuition rates — an unfortunate fact that will not support the logistics of this program.