Pay It Forward: No tuition, debt-free graduation – and full funding for higher education

The challenge: Climbing tuition + stagnant income = High debt + lost opportunity. The solution: Pay It Forward

Systemic underfunding of public higher education is closing the doors on educational opportunity for an increasing number of middle class and low income students. While tuition increases and “sticker shock” create significant financial and psychological barriers to high school graduates contemplating higher education, median household income growth has slowed to a crawl.

For example, at the University of Washington, tuition costs have increased by 215% between 1989 and 2010 (all calculations in constant dollars). Today total cost for in-state students in tuition and mandatory fees is more than $10,500/year. Tuition costs at community colleges have followed a similar trend, jumping from a little over $1,400 in 1989 to over $3,500 now.

By contrast, for the same time period (1989-2010), the median household income has grown by just one-tenth of one percent.

Tuition vs college/university tuition in WA

Not surprisingly, loans bridge the gap. In 2007, student debt for a graduating University of Washington student ranges, on average, from over $17,000 for students with family income of less than $25,000; to $15,000 for students with family incomes between $25,000 and $50,000; to $14,500 for students with family incomes greater than $75,000. And that was five years ago!

The Pay It Forward solution substitutes today’s “high tuition, big loan” model with “attend free, then pay 3”- that is, students in public institutions of higher education pay no tuition up-front, in exchange for agreeing to pay 3.0% of their annual income over the next 30 years. In so doing, they “pay forward” the opportunity for future students to do the same. (It’s similar to a proposal independently developed by students at University of California-Riverside.)

For example, a graduate earning $60,000 would pay $1800 a year; someone making $250,000 a year would pay $7500; and whoever gets a $1 million salary (say, for inventing the next Google or Facebook) would pay $30,000. Students in community college programs would use a similar model, but with a payback percentage of 1.0% per year.

Start-up funding will be required to get the first few generations of graduates through school and into jobs where they can start paying it forward. This could be a one-time source of private and/or public money used to cover the transition costs, enabling all students to participate in the Pay It Forward plan.

Another possibility is to use current state funding for tuition assistance as the starter fund, and as more students graduate through the pay-it-forward mechanism, gradually expanding the program to all students. Once it’s fully implemented, Pay It Forward will provide enough revenue to fully fund Washington’s public colleges and universities with no additional public revenue necessary.

At the federal level, Pay It Forward could also integrate Pell grant funding ($35 billion for FY 2011) and other sources of federal tuition assistance. A federal system would also simplify and streamline the tracking of graduates and their payback amounts through calculation, attachment, and collection through the IRS 1040 and W-2 forms.

To keep Washington competitive in the globalizing economy, we need a homegrown brain trust of talent and skill to attract good jobs and investment. One of our top priorities as a state should be to ensure all high school graduates have the opportunity to pursue an advanced degree or skilled trade in an institution of higher education. But ever-increasing tuition rates and a reluctance to take on significant student debt are discouraging some students from attending college. Pay It Forward would encourage student enrollment in higher education – particularly those deterred by high up-front costs – and allow graduates more flexibility in career choice without the threat of student loan repayments looming.

Tagged with: , , , , , , ,
Posted in Educational Opportunity, Higher Education


  1. Jessica M. Evenson says:

    Thank you for presenting a model that challenges the current paradigm of tuition in higher education. We are due for some fresh thinking on this topic! I share your passion and dedication to ensuring that all high school graduates have access to continue their education and/or training.

    While I acknowledge that you are focused on the state of Washington, have you considered how the #edtech sector might be a partner in this work (that of making college affordable)? Specifically, companies like 2Tor, Khan Academy, Udacity, etc. ( have venture capital dollars, but many have yet to determine how to become profitable. Your model appears to be one worth considering. I’m energized by the idea and would love to be at the table to brainstorm!

    And one quick question. Do you have data that suggests students do not enroll due to the “…ever-increasing tuition rates and a reluctance to take on significant student debt.”? While it seems like a very logical reason to not go to college, I question if high school graduates have a level of financial literacy to inform this kind of decision?

    Thank you for a thought-provoking article. I look forward to hearing more.

    Jessica M. Evenson

    • Audrey Peek says:


      1. Costs are confusing and sometimes hidden
      It’s true that sometimes students and parents do not realize the full cost of higher education at first. The actual cost of attending college after subtracting grants and scholarships is often lower than the “sticker price”. The Obama administration has been working to get schools to publish a “Financial Aid Shopping Sheet” to make tuition and financial aid easier to understand. When students realize how much they will need to borrow to pay the remainder of the actual cost, many choose not to enroll or not to continue school. This is called debt aversion, and it disproportionately affects students of color.

      2. Costs impact families unequally
      Some families are better able to shoulder increasing college costs than others. Nationally, a student in the top income quartile is 10 times more likely to complete a bachelor’s degree by age 24 (see “Family Income and Educational Attainment 1970-2009” in Postsecondary Education Opportunity, November 2010). Although many factors account for this (such as exposure to college educated adults and academic preparedness), cost in unarguably one of them. In Washington state, the cost of attending college is now 14% of the median family income, which is 64% higher than it was three years ago. Rising costs aren’t being matched by increases in student aid, which increases the out-of-pocket burden for middle and low income families.

      3. Inequality is growing
      The job market is growing in fields that require a college degree. Enrollments have also grown in response to these new opportunities for college graduates, although many students will never finish school. If we continue to finance higher education by raising costs that disproportionately affect certain groups, then college will only exacerbate the racial and economic divide in the country.

      -Audrey, Higher Education Policy Intern

  2. Dan Freysinger says:

    “The actual cost of attending college after subtracting grants and scholarships is often lower than the “sticker price”. ”

    This statement misleads the middle class who often pay sticker price.

4 Pings/Trackbacks for "Pay It Forward: No tuition, debt-free graduation – and full funding for higher education"
  1. […] for inflation, the price of UW tuition has more than tripled since 1989, while median income has barely budged, meaning that tuition eats up an increasingly larger portion of a typical family’s income […]

  2. […] possibility is to use the Pay it Forward model, where students attend for free, and then pay 3-5% of their annual income over the next 25-30 […]

  3. […] Friday) Our sister group in Washington State has one idea that might work. They call it “pay it forward.” It allows “students in public institutions of higher education pay no tuition […]

  4. […] Friday) Our sister group in Washington State has one idea that might work. They call it “pay it forward.” It allows “students in public institutions of higher education pay no tuition […]

Leave a Reply

Search the blog

Subscribe to the blog

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Like what you’re reading?
Reader support helps preserve our independent voice for the middle class - please chip in to help out!