A bill making its way through the state legislature potentially could transform the way students pay for college.
Introduced by Jack Franks, D-Marengo, HB 5323 authorizes the Illinois Student Assistance Commission to study the feasibility of a “Pay It Forward” program.
A “Pay It Forward” initiative would allow students to attend college for free and repay their loan after graduation in the form of a small, fixed percentage of their future disposable income.
Similar legislation has been introduced in 17 states with proposals in the works in several others.
Repayment can fluctuate as one’s earning potential changes. Under a proposal in Washington state, the repayment period is capped at 25 years.
Franks said he was motivated to introduce the bill by his own experience with college-aged sons and amid growing concerns for college affordability and student loan debt.
According to the Illinois Student Assistance Commission, it costs an average of $11,552 a year in tuition and fees to attend one of the state’s 12 public universities.
He said with tuition costs and loan debt skyrocketing, those from low- and middle-income families find it increasingly difficult to access higher education, let alone repay debt after graduation.
“The debt burden for young people, it’s strangling them,” Franks said. “Beyond that, it’s really hurting our economy.”
Newly-minted graduates might be unlikely to buy cars and homes if they’re buried under massive student loan payments, he said.
According to the Institute for College Access and Success, the average debt for Illinois seniors in 2012 was $28,028 and that 64 percent were carrying debt immediately after graduation.
Franks is joined by other economists and experts who predict that outstanding student loan debt could be front and center of the next financial crisis.
According to the Federal Reserve Bank of New York, there are about 37 million student loan borrowers with outstanding student loans today, amounting to somewhere between $902 billion and $1 trillion in total outstanding debt burden.
“With the system as we have it set up now, it’s about to implode,” Franks said. “It’s our next bubble, guaranteed. There’s way too much debt out there, and no way to repay it.”
• The Associated Press contributed to this article.
By The Numbers
• 7 in 10 seniors graduating in 2012 had debt
• National average student loan debt: $29,400
• Illinois average student loan debt: $28,028
• Proportion with debt: 64 percent
• Average tuition costs at Illinois public institutions: $11,552
Source: Institute for College Access and Success, Illinois Student Assistance Commission