What if you could go to college for free, and all you had to do in exchange was to agree to pay back a portion of your income after you had finished your studies? That’s what an ambitious group of students at the University of California, Riverside is proposing as a way to make college more affordable.
Chris LoCascio, a junior at UC Riverside who is studying English and political science, banded together students to form FixUC, a group dedicated to finding a long-term financial fix for the University of California system. Their ingenuity came in response to a nearly 18% tuition hike for the 2011-12 school year, made in response to a $650 million cut in state support for the mammoth university system. “We’re distraught with the lack of solutions that were being put forward,” LoCascio says. “The only reaction was to raise tuition.”
Instead of raising tuition, Fix UC suggests getting rid of it altogether. Under the proposal, in-state students would pay nothing upfront to attend any University of California campus. But upon gaining employment after graduation, they would be required to pay back 5% of their income for 20 years.
The students thought through various contingencies and incentives schemes, as well. If a graduate is unemployed for a period of time, his or her repayment total would adjust accordingly. If graduates stay in California, they would pay half a percent less because they would be contributing to the local tax base. Further, those graduates who go into California’s public sector, government workers, teachers, etc., would have an additional percent taken off their bill. And, because out-of-state and international students pay more to attend UC schools, they would pay back 6% of their income to the school.
Here’s how the plan is envisioned to work on a macro level: The UC system would phase in the plan over time in order to allow the revenue stream to build and avoid an immediate shortfall. There would be a four-year waiting period after the plan was approved while the schools wait for the first classes to graduate. The plan would be fully in motion after 10 years, at which point a projected 261,821 students would be paying a total of $712.6 million per year into the system.
The proposal would almost unquestionably be a good deal for students. After all, it’s essentially an interest-free student loan. According to Fix UC the current median salary across all nine UC campuses is $46,356, which means in the first year after graduation, the student would pay $2,317. Assuming the graduate’s salary only increases with 2% inflation for 20 years (a very low estimate), at the end of 20 years the graduate would have paid $56,316. That’s slightly more than the current average cost of attending a UC school, which Fix UC says is $52,936, but that difference paid over 20 years is the equivalent of paying an interest rate of less than 1%. That’s extremely low, as student loans today carry interest rates that range from 6% to 8%.
The benefits to the university are more clouded. The Fix UC students say that 20 years after the plan has been put in place, the university would earn $4.6 billion in revenue, nearly triple what the students say they are currently bringing in. They don’t detail how they arrived at that figure in the data report, however, and when I asked, Fix UC’s data analyst Alex Abelson said only that they arrived at the total after a “substantial amount of research with many variables within it.” Abelson said the variables included graduate rates, the number of graduates in the workforce, contribution amount, income, unfunded students, leftover financial aid, operating costs, and the growth of the university. He added that the group is working closely with the UC Office of the President to refine the projections. “It is not a simple calculation and the math behind it is very tedious,” he wrote in an email to TIME.
We tried to crunch some numbers ourselves but couldn’t come up with the $4.6 billion, perhaps because we aren’t privy to the variables at play. Still, our calculations suggest the university would bring in somewhere around $2.75 billion after 20 years of using the plan, assuming that every graduate is paying and is employed. If 5% of UC system’s students are unemployed, the figure drops to $2.6 billion. That’s more than the $1.5 billion in revenue the students say the university brings in today (which, adjusted for inflation, would be around $2.2 billion in 2031). But that may not be enough to compensate California for the cost of deferring of years tuition during the transition to the new payment system.
Regardless of the total gain for the university, or even whether this proposal goes anywhere (Fix UC President LoCascio says they will meet with the UC system president next month to discuss the plan) the wonderful thing about the student’s proposal is that they are thinking outside of the only-option-is-to-raise-tuition box. State-funded colleges have just sustained record cuts, tuition prices are skyrocketing at a rate more than twice that of inflation, and President Obama just called on universities to find a way to lower tuition or face losing federal funding. All of that makes one thing clear: Continuing to raise tuition won’t work, so colleges are going to have to get creative — and perhaps they should start by listening to what their students have to say.