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NC State Economist Dr. Mike Walden – “A New Plan for Financing College”

Mary:  I’m Mary Walden, with economist MW, welcoming you to the economic perspective. Today’s program looks at a new plan for financing college.  Mike, the cost of attending college is a big issue today.  Some argue that college debt held by graduates is impeding them in buying homes and other consumer durables.  But I understand one university recently unveiled a new plan to address the rising cost of college.  Give us the highlights.

Mike:  Summary Answer

  1. Plan is at Perdue University, and is a variation on similar plans
  2. Students will have an option to finance their degrees by pledging a percentage of their future incomes for payment for a certain time period
  3. Unique to the Perdue plan is that the repayment plan will be based on the student’s major and likely future income
  4. So interest rate, number of months of payments, and monthly amount of payment will vary by major
  5. Means amount repaid will likely be different for majors that pay high salaries versus those that pay low salaries
  6. Perdue is calling their plan an “income sharing arrangement” and not a loan
  7. Be interesting to see how works and if spreads
  8. I’m MW

Mary:  And I’m Mary Walden for the North Carolina Cooperative Extension Service