Christie Signs Bill to Study “Pay it Forward” College Tuition Financing

TRENTON, NJ—Legislation to study different ways to make college more affordable in New Jersey was signed into law by Governor Chris Christie on Thursday, February 5.

The new law creates a “College Affordability Study Commission” that would be charged with “examining issues and developing recommendations to increase the affordability of higher education in New Jersey.”

The bill, S-979, passed the State Senate on January 29, gaining the final approval from both chambers of the state legislature.

Among the ideas the bill orders the commission to examine is the “Pay It Forward” concept, where tuitiion would be eliminated and students would instead pay back loans as a percentage of their income.

The “pay it forward” concept proposes that while the student attends college, the state would pay their tuition.  Then in the years after graduation, the money would be paid off as a fixed percentage of their income.

The lower the income, the longer a period of time the graduate would take to pay off the loan.  

“We have to act to make college more affordable and to reduce the burden of college debt for students and their families,” Senate President Steve Sweeney, one of the bill’s sponsors, stated in a press release.

A similar bill passed through the Legislature early in 2014, but Christie ended up vetoing the measure. 

In his justification, the Governor stated that the commission would have been “redundant of current efforts underway by the Secretary of Higher Education and (Higher Education Student Assistance Authority).”

According to Mark Magyar, a press officer for the NJ Senate Democrats, the previous version bill called for all of the appointments to the commission be made by the Governor. 

The Assembly, Senate and Governor will have 30 days to appoint the ten members to the College Affordability Study Commission, to be selected as follows:

• (1) the Governor shall appoint two members including the president of a public research university, or a designee, and the president of a State college or university established pursuant to chapter 64 of Title 18A of the New Jersey Statutes, or a designee;
• (2) the President of the Senate shall appoint four members including the president of a county college, or a designee, one member of the faculty of a public institution of higher education in the State, appointed upon the joint recommendation of the American Association of University Professors, the New Jersey Education Association, and AFT New Jersey, and two public members, one upon the recommendation of the Minority Leader of2 the Senate; and
• (3) the Speaker of the General Assembly shall appoint four members including the president of an independent institution of higher education, or a designee, one student who is enrolled in a public institution of higher education in the State, and two public members, one upon the recommendation of the Minority Leader of the General Assembly.

At Rutgers, tuition, student fees and on-campus housing saw an average increase of 2.2% in July 2014. 

For the 2014-2015 academic year, tuition and student fees for New Jersey residents attending Rutgers New Brunswick are $13,813. For out-of-state students, tuition and student fees come to $28,581. 

Given the price tag of an estimate $12,000 extra for on-campus housing, over 10,000 studnets live off campus. 

As of 2014, the total student debt for the United States stood at around $1.2 trillion, with the average student having $25,000 in debt. 

In 2013 and 2014, talks of a pilot “pay it forward” program gained momentum in Oregon.  The proposal would have allowed students to enter a state university or community college for free, and then pay back annual 3-6% of their income over a 25-year period. 

The New Jersey version of the bill also applies only to state universities and community colleges. 

The Oregon State Legislature estimated that, with even just 1,000 students enrolled in the program, it would cost the state anywhere between $5 million to $20 million each year, for at least the next 20 years. 

With this in mind, the plans were scrapped in August 2014.

Many of the concerns around the idea are based on the difficulty of getting reimbursed.  For example, a student participating in the program might move out of New Jersey, or be unable to find employment.

“We have to figure all of that out,” Sweeney told The Star-Ledger, “We don’t want to provide an education, then not get reimbursed.”

In criticism of the concept, Mark Karowitz, a financial advisor, told The Star-Ledger that “there are a lot of aspects of this that they just haven’t considered.”