Imagine attending the University for four years without ever seeing a tuition bill appear on Wolverine Access. If a new bill under consideration in the state legislature succeeds, a new form of tuition assistance could eventually become a reality.
The Supporting Michigan and Retaining Talent Act would fund eligible students’ public higher education with the agreement that they would then repay a fixed percentage of their income for a set number of years following graduation.
SMART would introduce a “pay it forward” model of tuition in the state. In this system, a student’s tuition is funded by the fixed payments of previous program participants. Michigan’s proposal would require graduates to pay a percentage of their income — 4 percent for four-year college graduates and 2 percent for community college graduates — for five times the number of years they attended college. For example, if a student were to attend the University for four years, he or she would make payments for 20 years.
Rep. David Knezek (D–Dearborn Heights), who co-sponsored the bill in the Michigan House of Representatives along with Rep. Theresa Abed (D–Grand Ledge), said this interest-free tuition plan would eliminate financial barriers to higher education. The bill was introduced in February.
“Interest is taken off the table,” Knezek said. “By doing the program interest-free, we’re saving students tens of thousands of dollars — literally with the swipe of a pen.”
The current legislation includes only the implementation of a pilot program. Funded with an initial $2 million grant, the pilot would consist of 100 community college students and 100 four-year university students. Knezek said lawmakers would monitor the program’s success over a five-year period with the possibility of then considering system-wide legislation.
Knezek said one of the proposal’s best features is its ability to be self-sustaining in the long run.
“When you pay back into the program, this isn’t going to banks, this isn’t going to line anybody’s pockets, nobody is making a profit off you having attended an institution of higher learning,” he said. “Those dollars are going into the program to fund the next generation of students.”
Knezek said the legislation was introduced through identical House and Senate Bills, the latter of which is sponsored by Sen. Jim Ananich (D–Flint). The House bill is currently being reviewed in the Committee on Competitiveness chaired by Rep. Mike Shirkey (R–Jackson).
Shirkey’s office did not respond to requests for comment.
Michigan is not the first state to consider a “pay it forward” tuition model. John Burbank, executive director of the Economic Opportunity Institute, a Seattle-based public policy think-tank, said the state of Oregon recently passed a similar bill.
“It seems like every week there’s another state,” he said.
However, Burbank said what makes Michigan’s bill unique is that it would actually implement a pilot program, as opposed to simply authorizing higher education boards to study the model as the bills in Oregon, Illinois and Pennsylvania recently have.
Although opinions on SMART differ, voting records in other states indicate that support for similar tuition plans do not appear to be divided along partisan lines. Burbank said Maine’s bill was sponsored by a Republican senator and the proposals were passed unanimously in both Oregon and Illinois.
Knezek said he believes one of the reasons SMART has garnered some Republican support is its flexible funding options.
“One of the things that’s spurring interest from the other side of the aisle is that (we would) open this up to public and private funding options,” Knezek said. “On the public side, we’re asking for general fund dollars … but we also say that if there (are) private dollars that want to be invested in this program, we’re open to that as well.”
However, unlike in Oregon’s House and Senate, support for SMART is not unanimous in Michigan.
Audrey Spalding, director of education policy at the Mackinac Center of Public Policy, said tuition model plans are simply not sustainable in the long term.
“Is an engineering major who might be facing the prospect of earning $100,000 after graduation really going to sign on to a program where he’s promising a percentage of his income? Probably not,” Spalding said. “Is someone who’s considering majoring in a less lucrative major more likely to sign on to this program? Absolutely.”
Spalding said without those high-earning graduates, the fund would not be substantial enough to continually finance rising tuition costs.
Spalding said she is also concerned by the fact that “pay it forward” plans ignore the root problem — the exorbitant price tag of higher education. She said legislative initiatives such as SMART would actually incentivize universities to raise tuition, given that students would pay a fixed percentage of their own salary regardless of the institution’s price.
“It completely eliminates the connection between what you pay for your degree and what degree you get,” she said.
Last summer, the University’s Board of Regents approved the smallest annual tuition increase in 29 years. Still, the change is part of a broader trend of upwardly spiraling tuition. LSA in-state tuition increased by 60 percent between academic years 2004-05 and 2013-14.
Despite the opposition, Knezek said part of his confidence in SMART lies in the fact that everyone can agree that some kind of reform is necessary. When it comes to student loans, barriers to access and the cost of higher education, he said he remains committed to improving higher education in the state.
“Everybody acknowledges the fact that we have a crisis right now as it relates to college tuition.”
University spokesman Rick Fitzgerald said the University does not have a formal stance on the legislation at this time.