Pay It Forward: Th D bt F The Debt-Free Degree Plan for D Pl f - - PowerPoint PPT Presentation

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Pay It Forward: Th D bt F The Debt-Free Degree Plan for D Pl f - - PowerPoint PPT Presentation

Jan 07, 2023 226 likes •548 views

Pay It Forward: Th D bt F The Debt-Free Degree Plan for D Pl f Vermonters John Burbank Econom ic Opportunity Institute Seattle, Washington Presentation to the Verm ont House and Senate Education Com m ittees, March 22, 20 13 Pay It

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SLIDE 1

Pay It Forward: Th D bt F D Pl f The Debt-Free Degree Plan for Vermonters

John Burbank Econom ic Opportunity Institute Seattle, Washington Presentation to the Verm ont House and Senate Education Com m ittees, March 22, 20 13

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SLIDE 2

Pay It Forward is a Pay It Forward is a pragmatic p g business model f f di for funding higher higher education.

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SLIDE 3

How does it work?

  • Replaces tuition with post-

graduate contributions into a graduate contributions into a state trust fund

  • Funds future students from

this trust fund

  • Future students will also

participate in Pay It Forward pa t c pate ay t o wa d

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SLIDE 4

UVM Tuition and m andatory fees in UVM Tuition and m andatory fees in constant 20 13 dollars

$15,0 8 6 $11,8 22 $12,961

20 0 4 20 0 5 20 0 6 20 0 7 20 0 8 20 0 9 20 10 20 11 20 12 20 13

Source: page 20 of UVM Sourcebook FY 2013: http:/ / www.uvm.edu/ ~ofabweb/ sbfy13web.pdf http:/ / www.uvm.edu/

  • fabweb/ sbfy13web.pdf
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SLIDE 5

Percentage Increases in Tuition and Fees: Vermont public higher education

28 % 24 % 22% 4 18 %

UVW: 2004- Castleton State: Vermont Community 4 2013 2006-2013 Technical: 2006- 2013 y Colleges of Vermont: 2006- 2013

page 20 of UVM Sourcebook FY 2013: http:/ / www.uvm.edu/ ~ofabweb/ sbfy13web.pdf; page 45 of the Vermont State Colleges Sourcebook

  • f Institutional Data, Fall, 2012: http:/ / www.vsc.edu/ about-

vsc/ VSC_Office_of_the_Chancellor/ VSC%20Fall%202012%20Sourcebook%20of%20Institutional%20Data.pdf; BLS CPI-U Index, 1913- present: ftp:/ / ftp.bls.gov/ pub/ special.requests/ cpi/ cpiai.txt

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SLIDE 6

Average Student Debt of VSC Graduates (72.7% have debt)

$ $30,381.00 $19 549 00 $28,307.00 $3 ,3 $24,722.0 0 $19,549.00

Associates Baccalaureates Masters Total Average Debt per graduate in debt

Source: page 53 of the Vermont State Colleges Sourcebook of Institutional Data Fall 2012: http:/ / www vsc edu/ about- Source: page 53 of the Vermont State Colleges Sourcebook of Institutional Data, Fall, 2012: http:/ / www.vsc.edu/ about-

vsc/ VSC_Office_of_the_Chancellor/ VSC%20Fall%202012%20Sourcebook%20of%20Institutional%20Data.pdf

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SLIDE 7

The Pay It Forward Solution

Go to college without upfront costs

y

costs Contribute a fixed percent of income for a pre-determined number p

  • f years.

to a higher education trust to a higher education trust fund after graduation h f d bl f The fund enables access for future students

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SLIDE 8

No upfront costs.

  • Abolishes and replaces

tuition

  • Free and open access to

all qualified students all qualified students

  • Increases career choice

at college and after at college and after graduation

  • Zeroes out student debt
  • Zeroes out student debt
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SLIDE 9

C ib i i l Contributions proportional to income. income.

Amount based on market

  • Amount based on market

income; it is a rough estimate of human capital estimate of human capital development gained through higher education.

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SLIDE 10

Hailey is a high school senior. If she goes to a four year college, she will pay 4% of AGI for 25 years.

$221 $231

$250 $300 $150 $200

$91

$50 $100 $- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Years After Graduation

Calculations based on median income years after graduation. Source: Median Annual Salary BA (Total salary source: US Census Bureau data for 2010: "PINC-O4": http:/ / www.census.gov/ hhes/ www/ cpstables/ 032011/ perinc/ new04_001.htm)

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SLIDE 11

If she had paid with student loans and was $30,000 in debt Hailey would be charged about $350 a month.

Years (post- graduation) Median AGI (Annual) Standard Loan Repayment (Monthly) Income-based Repayment (Monthly) Pay It Forward Contribution (Monthly) 1 $36,000.00 $348.00 $240.56 $120.00 15 $50 000 00

  • $166 67

15 $50,000.00 $166.67 25 $55,000.00

  • $183.33

Total Paid $46,080.01 $53,903.79 $46,900.00

$33,368 average total debt, 6.8% loan interest, and 4% monthly AGI Pay It Forward contribution

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SLIDE 12

If she goes to a community college, she will pay 1.5% of AGI for 25 years.

$47 $52

$50 $60 $30 $40

$15

$10 $20 $- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Years After Graduation

Calculations based on median income years after graduation. Source: Mean Annual Salary AA (Total salary source: US Census Bureau data for 2010: "PINC-O4": http:/ / www.census.gov/ hhes/ www/ cpstables/ 032011/ perinc/ new04_001.htm).

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SLIDE 13

If she had paid with student loans If she had paid with student loans, Hailey would be charged about $125 a month.

Years (post- graduation) Median AGI (Annual) Standard Loan Repayment (Monthly) Income-based Repayment (Monthly) Pay It Forward Contribution (Monthly) 1 $33,000.00 $127.23 $127.23 $ 41.25 15 $40,000.00

  • $ 50.00

25 $45,000.00

  • $ 56.25

Total Paid $15,268.08 $15,267.94 $ 14,625

$11,056 average total debt, 6.8% loan interest, and 1.5% monthly AGI Pay It Forward contribution.

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SLIDE 14

Statewide Implementation

  • Transition to PIF in all

public colleges and p g universities

  • $110 million in Year 1
  • Each year as graduates
  • Each year as graduates

contribute to PIF, net cost declines

  • Year 17-26: Net Revenue
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SLIDE 15

Pilot Programs

  • Incoming class of students at UVM: 600 students

$9 million, $36 million in four years 9 3 y

  • Students at one VSC campus: Lyndon State: $6.5

million, reduced each year forward

  • First year of Community College: $22 million
  • Higher Education Endowment Trust Fund
  • STEM majors
  • Medical professions

P t l ti i ti f di PIF

  • Parental participation: pre-funding PIF
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SLIDE 16

UVM Higher Education Trust Fund: $1.5 m illion a year, with Pay Forward Receipts Pay Forward Receipts

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

YEAR

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SLIDE 17

18 9 20 4

Students on UVM Trust

139 163 18 9 10 0 10 5 119 139

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

YEAR

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

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SLIDE 18

Pay It Forward at UVM with VSAC Pay It Forward at UVM with VSAC Funding

$ $18 ,10 9,767 $10 750 192 $14,70 1,235 $9,0 0 0 ,0 0 0 $10 ,750 ,192

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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SLIDE 19

Students in Pay It Forward at UVM with VSAC Funding VSAC Funding

1,20 7 717 98 0 60 0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Year

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SLIDE 20

Pay It Forward at UVM and VSC with VSAC Funding VSAC Funding

  • $9 million
  • 30% for UVM students

% f VSC t d t

  • 40% for VSC 4-year students
  • 30% for CCV students
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SLIDE 21

PIF UVM/ VSC Receipts p

$22,537,48 6 $17,344,643 $9,000,000 $11,507,485

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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SLIDE 22

Students in Pay It Forward at UVM and VSC with VSAC Funding VSC with VSAC Funding

2,126 1,636 8 49 1,0 8 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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SLIDE 23

24 22

Years to Positive Cash Flow per CCV student: various tuition levels: Pay It Forward

22 17 15

$7,500 $6,690 $5,000 $4,000

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SLIDE 24

P

AY IT FOR WARD AT GREEN RIVER COMMUNITY COLLEGE:

P

AY IT FOR WARD AT GREEN RIVER COMMUNITY COLLEGE:

ANNUAL ADDED REVENUE

) enue (2011 dollars) Annual added reve 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 A 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Years after Green River Promise implementation

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SLIDE 25

P

AY IT FOR WARD AT GREEN RIVER COMMUNITY COLLEGE:

P

AY IT FOR WARD AT GREEN RIVER COMMUNITY COLLEGE:

GROWTH IN NUMBER OF S

TUDENTS

10,000 7 000 8,000 9,000 8,170: Current FTE at Green River Community College 5,000 6,000 7,000 ents (FTE) 3,000 4,000 Stude 1,000 2,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Year(s) after Green River Promise implementation

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SLIDE 26

16,58 2

14,739

Students on Green River Prom ise calculated with various tuition alternatives

13,265 12,0 60 11 0 55

Number

  • f

Students

  • n Green

River Promise

11,0 55

9,212

Tuition: $2,000

8 ,170 : current FTE at Green River

$ , Tuition: $2,250 Tuition: $2,500 T iti

3,10 8

1,727

Tuition: $2,750 Tuition: $3,000 Tuition: $3 600

,7 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 $3,600

Year From Inception of

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SLIDE 27

PAY IT FORWARD STEM EDUCATION: GROWTH IN NUMBER OF S STUDENTS

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

Year(s) after implementation

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SLIDE 28

Partnering with other states would increase students’ options and p mobility.

  • Pennsylvania
  • New York

W hi t

  • Washington
  • Wisconsin

Oregon

  • Oregon
  • California
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SLIDE 29

Right now, we are:

  • Consulting with legislators
  • Consulting with legislators
  • Working with stakeholders
  • Figuring out how to start pilot programs

g g p p g

  • Developing tighter actuarial calculations
  • Developing interactive spreadsheets

W ki i h h US T

  • Working with the US Treasury
  • Working with other states about their

efforts efforts

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SLIDE 30

Economic Opportunit y Institute pp y

  • New Tools for Building the Middle Class

Thi ki O id h B

  • Thinking Outside the Box
  • www.eoionline.org
  • john@eoionline.org
  • 206-755-5969