Is This the Answer to the Student Debt Crisis? FixUC's 5% Solution

When it comes to economic protests, the Occupy movement has dominated headlines. But as the recent pepper spraying incident at a Santa Monica College tuition protest demonstrates, the struggle over America's economy is playing out on several fronts.

For college students, recent graduates and their families, the most pressing concerns may surround our higher education system: Student loan debt is at an all-time high, and the average college graduate leaves school with over $25,000 in loans. And, with tuitions rising and unemployment among recent college grads still high, it's no surprise that many students are up in arms.

"For years, there have been protests in response to university budget cuts," UC Riverside student Chris LoCascio notes. "The system is clearly broken, and new solutions are needed."

LoCascio thinks that he may have found the answer. His group, FixUC, has developed a plan that, they claim, will ameliorate the student debt crisis while actually increasing university funding. On the surface, it's remarkably simple: Rather than charging tuition, the University of California system would charge its graduates 5% of their yearly salaries for twenty years.

"Charging students when they don't have money doesn't make sense," LoCascio points out. Instead, the FixUC plan would charge students when they are actually able to pay -- once they're out in the workforce. "In 20 years, our plan would double the amount of money coming into the UC system."

'A Massive Undertaking'

While the basic outline of the FixUC plan is simple, the implementation would be more complex. To begin with, there's the issue of ensuring collection. Under the current system, universities have an ironclad method to compel students to pay their tuition: Those who don't fork over the money generally aren't allowed to stay in their classes.

The FixUC plan, on the other hand, would task universities with recovering funds from students who are no longer under their control -- which, LoCascio admits, would require some level of enforcement. He proposes that the IRS get involved: The FixUC plan calls for "a new department of the United States Internal Revenue Service in charge of collecting contributions." This added layer of bureaucracy would be somewhat self-financing -- partly funded by the tuition that it would collect.

LoCascio's knows that adopting the plan would be "a massive undertaking," fundamentally changing the way that America views -- and funds -- college. "It would involve a complete tear-down of our current funding model."

A Cost Beyond Tuition?

Because the FixUC calls for a 5% yearly contribution from graduates, it effectively establishes a wide-ranging tuition. One version of the plan establishes a base income of $30,000 -- graduates who make less than that amount would be exempt from making their 5% payments. On the upper end, graduates who make more than $200,000 per year would have their yearly contributions capped at $10,000. In other words, the yearly post-graduate tuition payment would range from $1,501 to $10,000.

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One could argue that this system would, effectively, force graduates from high-paying majors to fund lower-paying ones. After all, while the median income for a petroleum engineering graduate is $127,000, the median income for someone with a bachelor's in school student counseling is only $20,000. For universities looking to maximize their income, it would make sense to channel funds to more profitable departments, while letting less lucrative ones wither on the vine.

Lest that scenario seem too outrageous, it's worth remembering that a very similar situation led to Tuesday's incident at Santa Monica College. The school, looking to increase funding, was considering a proposal to quadruple the price of some of its most popular courses. When students tried to attend the meeting evaluating the plan, they were pepper sprayed.

But LoCascio is convinced that the FixUC proposal would not result in cuts to departments that lead to less lucrative careers. "I have a lot of faith in the UC faculty and their dedication to academia," he says. "I can't imagine that a plan like this would have such an effect."

A Plan for California ... And the Country

Having put together a plan for the UC system, FixUC is expanding. FixCSU, a similar proposal tailored for the California State University system, is in the works. Meanwhile, LoCascio has begun laying the groundwork for a national organization. "I've been contacted by a number of universities across the country," he notes. "It looks like the FixUC plan might be way of the future."

With states across the country cutting higher education funding and the student debt crisis growing increasingly dire, there's little question that bold solutions are needed. While some wrinkles certainly need to be ironed out, it seems like FixUC may well be on the way to finding the answer.


Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at@bruce1971.