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