Michigan lawmakers have proposed a pilot program in which students would receive free college tuition in exchange for donating a fixed percentage of their future income to a fund that will pay the tuition of other college students.
More than 20 states are looking into this type of program, but the legislation in Michigan would get the program underway with $2 million in startup funding – enough to test the policy with 200 students.
The plan would require university students to pay four percent of their future income for five years for each year they attend school without paying tuition. The rate would be lowered to two percent for community college students.
Proponents of the bill say spreading out repayment and removing interest from the equation will reduce the financial burden on graduates. University of Michigan Professor Susan Dynarski, who teaches on the economics of education, says the proposal "ensures borrowers against hard times."