Testimony: Pay If Forward Raises Concerns for Low-income and Working Adult Students

MECEP is particularly concerned with the impact of college affordability proposals on low-income and working adult students. Pay It Forward raises a number of concerns. MECEP commends the following principles of affordability for this commission to consider when evaluating Pay It Forward or other college affordability initiatives.


Hon. Senator Rebecca Millett
Hon. Representative Matthea Elizabeth Daughtry
Members of the Commission to Study College Affordability and College Completion
c/o Maine State Legislature
Augusta ME

Dear Senator Millett and Representative Daughtry,

I am Jody Harris of the Maine Center for Economic Policy (MECEP). MECEP is a nonprofit, nonpartisan organization that undertakes rigorous economic analyses to advance credible policy solutions for all Maine people.

College affordability and college completion has immediate and long-term consequences for Maine’s people and economy. In recent months, MECEP has engaged in research that overlaps with the important work of this commission. This includes documenting the affordability challenge for Maine students and families, assessing the impact of the Opportunity Maine student loan tax credit, and evaluating the pros and cons of Pay It Forward. It is in conjunction with our work on Pay It Forward that I am here today. 

MECEP is particularly concerned with the impact of college affordability proposals on low-income and working adult students. These individuals make up a significant share of Maine’s current and potential student population. We urge you to keep them in mind when evaluating Pay It Forward and other proposals. 

From the perspective of low-income and working adult students, Pay It Forward raises the following concerns: 

  • Pay It Forward does not pay room, board, or supplies. At the state university flagship campus, room and board, plus books and related costs of attendance, add up to $12,500 compared to $10,600 in annual tuition and fees for 2014[i]. Low-income students will still need to work and take out loans to pay for room, board, and other costs of attendance and could end up paying two bills; one for Pay If Forward contract and another loan payment for room and board. 
  • Child care costs are a significant deterrent for parents pursuing higher education. For a student in Penobscot County with one preschooler, licensed daycare costs $7,200 annually[ii]. For adults earning minimum wage, the cost of childcare for one child consumes 40% of their gross income.[iii] Despite the necessity of childcare for working parents, daycare centers have been closed at UMS campuses in recent years. This expense falls outside the purview of Pay It Forward and either becomes more debt or remains a significant barrier for parents to attend college. 
  • Adults going back to school are not well-served by an estimated 20-year repayment model under Pay It Forward. This approach, which is biased toward a younger cohort, limits the incentive effects of Pay It Forward for older students faced with making payments into their retirement years. According to the Working Poor Families Project, more than 200,000 Maine adults have some post-secondary education, but no degree[iv], meaning they did not complete college. That’s nearly one-quarter of our adult population. And it is the highest rate in New England. 
  • Pay It Forward’s benefits for part-time students are unclear. The program is aimed at traditional students who pay 1% of future income for each year attended (i.e. 2% for community college and 4% for a bachelor’s degree). Adult students, who have work and family responsibilities, frequently take longer to complete a degree. Eligibility and repayment requirements must be put in place so that part-time students aren’t left out. 

In addition to these issues, MECEP is concerned about the source and amount of funding required to launch Pay It Forward. Start-up funding should not jeopardize existing support for education and programs that help low-income families and working adults get on a pathway to greater economic security. 

Principles of College Affordability

The task before the commission is a challenging one that can and should be informed by a few key principles. In addition to those that you have already considered, from the perspective of low-income and working students MECEP commends the following principles of affordability for this commission to consider when evaluating Pay It Forward or other college affordability initiatives.

  • Affordability initiatives should alleviate unmet need.

Programs that leave low-income earners with debt by failing to address cost and unmet need do nothing to remove the barriers to pursuing higher education. While Pay It Forward postpones tuition costs until after graduation, college is still not affordable, especially for low-income students who are contractually obligated to re-pay tuition bills over a period varying from 18-25 years. 

  • Affordability initiatives should address the different needs of working adult students.

If we are to upgrade the skills of Maine workers, we must do an effective job in helping working adult students and the 200,000 Mainers with some college complete their degree. To do this, we must recognize that many adult students have special childcare and transportation needs; they often need to attend classes year-round and part-time; they need flexible scheduling and more time to complete a degree. Maine should avoid proposals that would penalize 5-year students or discourage part-time students. 

  • Affordability initiatives should prioritize helping low income students get on a pathway to greater economic security.

In a low-income state like Maine with a great divergence between economies in rural and urban regions, affordable higher education is critical for low-income students. This is particularly important if these students are to move along the pathway to greater economic security. Merit-based aid, while increasingly popular as public universities target students from higher-earning families to help boost tuition revenue, should not come at the expense of opportunities for low-income students. Furthermore, existing programs such as Opportunity Maine should be reviewed to ensure their value for low-income students. Priority should be given to programs that meet a clear need for low-income students such as the state of Maine grant should be expanded. 

  • Affordability initiatives should not reduce need-based aid.

Need-based aid is critical to bringing low-income working adults into higher education―and should be protected. Programs should not redirect funds previously dedicated to need-based aid, as the original iteration of “Pay It Forward” proposed in Washington State. 

  • Affordability initiatives should not harm state funding for public colleges

Affordability proposals should not strip money critical for quality instruction, or for the support services research shows ensure college completion for at-risk students. Proposals should ensure the financial stability and integrity of the public system as a public resource.  

A Pay It Forward contract covers tuition and fees up front but looks like a loan on the back end. It is an alternative payment model, which does nothing to reduce the cost of college. Ultimately this raises questions about whether or not Pay It Forward will actually change the incentives for low-income students to pursue higher education. 

Thank you for your time and consideration.

 Jody Harris’ speaking before the legislature’s special commission to study college affordability and college completion.

End Notes:

[i] See “Costs at UMaine – Undergraduate Costs of Attendance,” available at http://umaine.edu/stuaid/costs-at-umaine-2/undergraduatecoa/. In-state tuition ($8,370) plus fees ($2,236) total $10,606 for academic year 2014-2015. Cost of attendance totals $12,496 and includes room and board ($9,296), books and supplies ($1,000) and travel/miscellaneous ($2,200).

[ii] Maine Department of Health and Human Services: Child Care Market Rates, October 2013.  Available at http://www.maine.gov/dhhs/ocfs/ec/occhs/2013-child-care-market-rates.pdf.

[iii] Institute for Women’s Policy Research and Association of American Colleges and Universities.

[iv] Working Poor Families Project using the American Community Survey (ACS), the Current Population Survey (CPS), and the Occupational Employment Survey (OES) (2012). Available on-line at http://www.workingpoorfamilies.org/indicators/.


This work is funded by the Working Poor Families Project.