When I knew I wanted to attend Washington University in St. Louis, there was a major roadblock: The cost. Wash U is a private school, and tuition in 1999 was, as I recall, around $35,000, including room and board.
Wash U offered some financial aid, but based on my family’s budget, the numbers didn’t add up for us. I’m really fortunate that my dad’s specialty was budget management, and he sat down with a financial aid person at Wash U to discuss how much he could afford out of pocket and how much would need to be allocated to financial scholarships, loans, work/study jobs, and summer jobs for me.
While it took me around 10 years to pay off my student loans, I was lucky to have my family’s support from day one, and even the loans I had didn’t cut too deep into my monthly income. Many others are not as fortunate, especially these days. Universities with massive endowments continue to charge more and more every year, leaving students with the sole motivation to get a job to pay off their loans, opposed to finding a job (or higher degrees) that are fulfilling and impactful.
I had a great chat about this with Megan recently, and we had a modest proposal. I also heard an even more compelling idea on a recent episode of Revisionist History.
Our idea is: What if a college gave you a choice to either (a) pay for tuition each semester, using loans if necessary or (b) get free tuition, but for the next 25 years, 1% of each paycheck you earn automatically goes to the university. The second option ensures that the university is investing in you; isn’t that kind of the point?
The Revisionist History episode is about Hope College, and their method–which they’re testing at a small level now–is that students can choose to sign a covenant in which they agree to donate a portion of their income to their alma mater, kind of like a tithe. It isn’t legally binding.
One other option I’ll throw in the mix, perhaps more of a query than anything else: What is to stop anyone from attending a lecture class at a university? I had a number of classes where attendance topped 100 students. The professors just talked for an hour or so with very little engagement. Couldn’t anyone just walk into those classes and learn something if they really wanted to?
How have student loans impacted you, and is there a way you’d like to see the system evolve?
Here in Australia, the government pays for your university tuition costs, and it is then recouped via tax until you pay it back.
Because the government says how much it will pay, universities can’t just charge whatever they want (for tuition at least), because if there was a gap, people would just go to a different university.
The payback has a minimum threshold (I think it’s currently around $50k taxable income before they start requiring payment), and the percentage of your income withheld increases as you earn more. I think mine was paid off in 5 years or so.
You can choose to pay off the debt early, or pay upfront (for a discount), but this lets everyone go to university who wants to, without encumbering them with a massive debt.
Currently the US system incentives are hugely misaligned, leading to rules such as not being able to discharge your debt through bankruptcy etc. I think it’s worth considering entirely different systems to get it working well!
(We also have a single body that administers the vast majority of university admissions, rather than every university doing something different, and that is far less stressful on high school students applying too)
That seems so much better than our system!