Sunday, April 20, 2014
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Southern Maine Community College students talk about the idea of a “Pay It Forward” model Thursday in South Portland. From left, they are: Nicholas Gallup of Falmouth, Payton Bourne of Holderness, N.H., and Adeleana Bayreuther of Readfield.
Derek Davis/Staff Photographer
Harleyanne Hustus, a third-year student majoring in early childhood development, works on her laptop Thursday. She plans to get a bachelor’s from the University of Maine but came to SMCC first because it was less expensive. “Working and interning – it’s a lot,” she said.
Derek Davis/Staff Photographer
Pay It Forward could benefit students’ families, which typically contribute a significant amount toward college. An annual survey released earlier this year by loan giant Sallie Mae found that parents’ income and savings covered 27 percent of college costs and student loans covered 18 percent. The survey found that one-fifth of parents worked longer hours to pay for their children’s college education, and half of students increased their work hours, too.
Several students at Southern Maine Community College in South Portland said it sounded like an interesting idea.
“I would have gone for it,” said Nicholas Gallup, 18, who already has about $7,000 in college debt and is still in his first year studying mechanical engineering. For now, Gallup is looking for a job – as are many of his friends, he said – and plans to transfer to a four-year college. Finding the money to pay for college is a big concern, he said: “Being able to not have to worry about money would help.”
Adeleana Bayreuther, a freshman at SMCC studying to be a medical assistant, said a lot of her friends worry about high college costs.
“I think a lot of people would take advantage of it,” Bayreuther, 18, said about the Pay It Forward model.
Some critics of the model argue that wealthy families won’t participate and too many low-income graduates won’t be able to provide the necessary revenue to sustain the model. Others say the startup costs are too big to overcome.
Burbank said the model, if anything, is conservative and that it can work even in a low-population, low-average-income state like Maine. Startup costs are a challenge but could be tackled in various ways, depending on the resources and appetite of state leaders and voters.
Another concern is verifying a graduate’s income every year to ensure proper repayments. Burbank said he is in discussions with the Internal Revenue Service to determine if the agency would be willing to partner with states under a Pay It Forward plan. There are also proposals to get federal legislation or funding to back the model.
“The devil is in the details,” Burbank acknowledged. “How do you make sure that contributions are tracked and maintained over a 15- to 20-year period? In the event the IRS is not forthcoming, there’s a number of those kinks that need to be worked out.”
Burbank said states are coming up with their own ideas about how to cover startup costs, from seeking voter approval for multibillion-dollar bond proposals in larger states (a Pennsylvania proposal considers paying off a bond with a tax on fracking) to one state considering tapping into existing college endowments to jump-start a program.
“There’s no one approach that necessarily will work,” Burbank said. “There are different ways for states to make it work.”
In Maine, a small population and low wages are issues. The entire undergraduate student population at all campuses of the University of Maine System and the Maine Community College System is only about 45,000 students. Maine workers between the ages of 25 and 34 earn an average annual wage of $31,932. For workers between 35 and 44 years old, it increases to $43,164, according to U.S. Census figures.
A calculation using those figures reveals potential pitfalls of the plan: Tuition alone at the University of Maine in Orono is $8,370 a year, so the bill for four years would be $33,480. But 3 percent of the average annual wages over 20 years would generate only $22,528 in payments – almost $11,000 short of the state’s investment in a single student.
Burbank notes that the model accounts for a range of low- to high-wage earners paying into the system, and workers with college degrees generally earn more money. But studying those details is key.
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