Neel Kashkari, a Republican candidate for governor of California — and a former assistant secretary of the U.S. Treasury and PIMCO executive — recently unveiled a “bold action” plan to overhaul the state’s education system if he is elected.
One of his key proposals is to offer a “tuition-free” college experience for science, technology, engineering, and mathematics (STEM) majors, with students repaying the investment with an annual amount of their salary.
While not mentioning specific figures for his plan, Kashkari cites Oregon’s proposed “Pay It Forward” model, which charges students no tuition while they’re students but takes 3% of annual future earnings for 24 years.
As Business Insider wrote when this plan first gained attention last year, there are several potential problems with the “Pay It Forward” model, not least of which is that high-earning graduates, such as STEM majors, have little incentive to opt in.
In a short paper for the Century Foundation addressing issues with Oregon’s “Pay It Forward” plan, University of Wisconsin Sociology Professor Sara Goldrick-Rab cites a “similar effort pursued at Yale in the 1970s which revealed that wealthy students who achieve high-paying jobs do not like income-based repayment schemes.”
Although Kashkari’s plan hopes to increase the number of low-income STEM majors, it is still likely that, as Goldrick-Rab writes, “wealth-seeking students will have an incentive to move from flagship public universities over to the private sector” rather than pay back a percentage of what could be a high annual salary.
Overall, students usually end up paying more under these plans than they would under a more traditional tuition system, as they’re also contributing extra funds to support current “tuition-free” students. If only a low number of students opt into the proposed program, California could face a large burden in supporting tuition free students without a large source of revenue simultaneously coming back to the state.
Goldrick-Rab also notes that these types of plans do little to alleviate the total cost of college, which is more than just simply tuition. Room, board, books, and school supplies could amount to tens of thousands of dollars in extra costs and would likely not be covered under this plan — leaving a still-significant financial burden on low-income students.
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