Pay It Forward critics missing tackles in rush to grab the ball

November 14, 2013 | Economic Opportunity Institute

Pay It Forward critics want the ball

Pay It Forward critics are swarming – but so far haven’t found their footing. [Photo: Ed Ball via Flickr]

Almost a half-year since its announcement, Oregon’s Pay-It-Forward initiative has few allies. In fact, almost every education organization concerned with college affordability and access has denounced the plan. In addition, Education Trust Director Kati Haycock recently wrote an editorial criticizing the design of PIF and warning of the negative consequences the initiative would have on students of all stripes.

While we respect many of the organizations that have banded together to voice their concerns over PIF, we admit that we are a little confused about the avalanche of protests around this program. We’ve heard the common complaints before and have addressed them previously, but these same points continue to be trotted out by the detractors: some students will pay more than others, the system doesn’t address rising college costs, and it doesn’t quell state disinvestment in higher education. For a rebuttal of these specific issues, we recommend you read this Matt Bruenig piece for an extensive breakdown, but in short:

Students paying differing amounts of tuition is no different from the public tax system we currently use to fund higher education, rising college costs will be kept under control due to institutions relying on a fixed percentage of tax levied on students (effectively serving as a cost cap), and concerns over state disinvestment at this point are a Sisyphean exercise. Basically, knowing the patterns of state investment over a long period of time overwhelmingly shows that restoring higher education funding is not a great priority for the majority of statehouses across the country, nor is it likely to ever be.

We want to highlight, however, some of the potential unintended benefits of PIF that haven’t been covered yet. For example, PIF could an act as effective counter-balance to some of the college-ratings criteria that are being proposed by the Department of Education. Currently, there are concerns that this college-ratings system would tie funding to graduation rates and employment and not adjust for demographics, which would then compel institutions to “turn away at-risk students, relax graduation standards, or drop degrees in low-playing fields,” as articulated in a recent Chronicle of Higher Education article. In addition, institutions are going to be squeezed by the catch-22 of being rated by cost while still receiving declining state funding.

PIF would essentially maneuver around these ratings criteria. First of all, the deferred tuition costs would most likely translate to higher graduation rates, because lower-income students would be less burdened by costs during the period of their enrollment. Second, Oregon institutions wouldn’t be at the mercy of federal funding, due to the (presumed) sustainability of the PIF program, which in turn would free these institutions from having to worry about dropping programs that would not produce graduates in high-earning occupations. High-earning students would help to subsidize the lower-earning programs, which is how the public good of higher education is intended to work. Whether we’re talking about elite privates, flagship publics, or any other category, it has long been the case that more affluent students help subsidize the education of less affluent students. The only question is how the tax is levied. One could make a very strong argument that PIF, which is based on future – not current – income, is a more equitable way to levy the tax.

Another contemporary higher education issue that PIF would address is sticker price shock. Although we have argued that concerns over college costs are overstated, we still acknowledge that many students lack to the tools to identify institutions that would provide them the best value and price. Net price calculators are still essentially in the beta phase, and colleges and universities often make a habit of obscuring their net price and often their sticker price. Again, PIF removes some of this confusion by simply levying a flat tax on all of its graduates. Low-income families wouldn’t be as stressed to produce tuition money out of pocket, and maybe private institutions that want to compete for these talented low-income students would devise more transparent ways of revealing their net-price.

Will PIF actually succeed in being both sustainable and increasing access? We don’t know. But the pre-emptive dog-pile by so many respected higher education organizations seems misguided. Reforming higher education finance takes big, risky ideas, and other than advocating for greater state-level investment, the critics have proposed few innovative or even realistic alternatives. At this point, given the country’s financial and political climate, we would not hold our breath waiting for statehouses to suddenly make higher education a much higher priority.

Original post by Art & Science; headline and photo by Economic Opportunity Institute

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Posted in Check, Educational Opportunity, Higher Education

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