Proposal: Students would use future earnings to repay grants

A Georgia Senate committee heard a proposal Thursday afternoon to allow some college students to repay grants with a portion of their future earnings, but the committee chairman said the bill needs some work.

The legislation, Senate Bill 57, called the “Pay Forward, Pay Back Student Grant Act,” would offer grants determined by the Georgia Student Finance Commission to students at University System of Georgia schools. Students would begin repaying the grants after they complete their studies. They would have 10 years to repay the grants.

Lawmakers had several unanswered questions about the legislation, such as how the state would determine which students are eligible for the grants, how the state would pay for the grants and what happens if the student owes money after 10 years.

“I don’t think it’s ready for prime time,” said Sen. Lindsey Tippins, a Marietta Republican, who offered to work with the bill’s author on the legislation.

The bill’s main sponsor, Sheikh Rahman, a first-year Democrat from Lawrenceville, said he will rework the legislation with advice from Tippins that the bill focus on students with financial need. Rahman cited statistics showing an increase in average student loan debt for Georgia students, as well as tuition, housing and fees.

“We need to have some kind of control (on college costs),” he told The Atlanta Journal-Constitution.

Rahman’s proposal, commonly called “income sharing agreements,” is used by a small number of schools nationally and is a much-debated idea in industry circles. Some education experts say they’re unregulated and worry it’s potentially predatory.

Purdue University in Indiana is the best-known school offering the grants. Its “Back a Boiler” program, funded by its research foundation, gives students at least $5,000 per semester or up to 15 percent of their expected annual income. Purdue doesn’t charge interest, but the amount of money students are required to pay can increase if the former student’s income increases. The program began in the 201617 school year with 160 students receiving grants. One Georgia official said Thursday that Purdue’s program requires students to pay back 1 or 2 percent of their future earnings for up to 10 years.

The Flatiron School, a for-profit coding school that opened a campus in Atlanta last year, has an income sharing agreement that requires students to pay 10 percent of their monthly gross income as long as they’re making at least $40,000 a year.

The school started offering agreements late last month. Students make a maximum of up to 48 monthly payments, according to information on its website a spokeswoman shared with the AJC. The school has 23 students.

The committee did not vote on the bill. Rahman plans to rewrite it.