Tags: Michigan | college | tuition | Elizabeth Warren | student loans

Michigan Plan Would Allow Students to Attend College 'For Free'

By    |   Wednesday, 19 March 2014 12:38 PM

Students would be able to initially attend college for free under a new plan introduced recently in the Michigan Legislature, but they would have to pay for it down the road.

The plan would require students to pay a fixed percentage of their income after college for a specified number of years to a special fund that would in turn pay tuition for other students, the Detroit Free Press reported.

"The goal is to remove every financial barrier to high education," Democratic state Rep. David Knezek of Dearborn Heights told the newspaper.

"We've increasingly placed the financial burden of college on the backs of the students. This is a no-interest plan that allows you to pay back as you go and as you can afford it. It takes the monkey off the student's back."

Under the plan, community college students would pay 2 percent of their post-college income to the fund, and university students would pay 4 percent of their post-college income for five years for every year they attended school under the program, according to the newspaper.

For a student who went to the University of Michigan and graduated in four years, that would mean giving 4 percent of their income to the fund for the first 20 years after college.

More than 20 states are reportedly looking at similar legislation, but the Michigan bill is the only one that would move to establish a fund with a starting base of $2 million for a pilot program involving 200 students.

The move comes shortly after Democratic Sen. Elizabeth Warren of Massachusetts thrust the issue of student loan debt back into the spotlight while delivering the keynote address  at the Higher Ed Not Debt Campaign launch event at the Center for American Progress in Washington.

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Warren argued that the United States faces a choice between investing in students or in millionaires and said she plans to introduce a bill that would create an "America that invests in those who get an education" by revising the tax code and enacting the Buffett Rule, ThinkProgress.org reported.

The Buffett Rule, named after billionaire investor Warren Buffett, is the idea that anyone making  more than $1 million annually should not "pay a smaller share of their income in taxes than a middle-class family pays," according to the White House website.

Critics of the Michigan bill say it has potential problems, including the fact that a borrower who goes on to earn a hefty income could end up paying the loan many times over.

"As a result, those who expect to earn a lot won't participate," Susan Synarski, a University of Michigan professor who is an expert on higher education finances told the Free Press.

"If the future starving artists flood in to pay it forward, and the future engineers shun it, the program will spiral into insolvency. An easy fix is to denominate the debt in dollars rather than years. When a borrower finishes paying off her loan, she stops paying."

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Students would be able to attend college for free initially under a new plan introduced recently in the Michigan Legislature, but they would have to pay for it down the road.
Michigan,college,tuition,Elizabeth Warren,student loans
Wednesday, 19 March 2014 12:38 PM
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