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Q1. What is the problem with student loans? . . .
More than 7 out of every 10 students graduate with an average of $30,000 in debt, and those numbers are growing rapidly. This black cloud of debt has crippling effects on peoples’ lives and the overall economy, keeping grads from starting families, buying homes, and creating businesses.
The interest that starts accruing as soon as students take out loans grows their debt before they’ve even graduated. And regardless of whether grads can afford their loan bills, they keep coming, and potentially keep growing. Meanwhile, colleges can keep increasing prices, because they know students have access to virtually unlimited loans.
The whole college financial system is a mess, and student loans are at the heart of the problem.
Q2. Why is College 2.0 better than student loans? . . .
It doesn’t make sense to charge students tuition at a time in their lives when they aren’t making money—that’s what led to so much debt.
College 2.0 does away with everything that makes college a nightmare to pay for, aligning the interests of colleges and students so that when students succeed, colleges do too. Income percentage contributions automatically adjust to what grads earn, so their financial commitments are always affordable.
Current colleges mask their prices behind vague promises of financial aid, essentially allowing colleges to buffer competition with one another. College 2.0 creates price competition between schools by having clear financial commitments—income percentage, duration, and average graduate income—so that they have an incentive to lower costs to attract students.
And because College 2.0 spreads out contributions across a large number of graduates to cover the costs of the few currently-enrolled students, everyone is able to pay much less.
Q3. How much do students pay at College 2.0 schools? . . .
Students at College 2.0 schools are not required to meet any up-front costs like tuition, textbooks, and room and board. Instead, they contribute a percentage of their income for a set period of time once they leave school.
That percentage and duration, which we call alumnumbers, are different for each school. Students can choose between College 2.0 schools by comparing their respective alumnumbers and average graduate income.
Q4. What are alumnumbers? . . .
Alumnumbers is the name we gave to the basic financial components of College 2.0 schools: the percentage of income students contribute after college and the duration of those contributions. For example, “My alumbumbers at State University A are 3% for 12 years!”
Q5. Will students pay less on College 2.0 than they would with loans? . . .
That’s the point! With tuition prices on track to reach six figures in the coming generation, we realized that we had to do something to bring prices down. College 2.0 features a host of downward pressures that act to reduce college costs over time.
To learn more about College 2.0’s downward cost pressures, please see the Annotated College 2.0 Plan.
Q6. Which colleges are eligible to adopt College 2.0? . . .
Any four-year college or university can apply to adopt College 2.0, although some schools will be better suited for the model than others. Because College 2.0 schools depend on the contributions of their graduates, the schools will need to have good graduation and employment rates for the model to work best.
If you would like your school to adopt College 2.0, contact your college’s administration.
Q7. Who pays for College 2.0? . . .
Colleges invest in students’ up-front costs, and students contribute a percentage of their income back to the college for a set period of time after graduating. Colleges get their startup capital a number of ways, but it is considered an investment and will likely be financed by investment funds. States have incentives to boost funding to make their schools more competitive and economically impactful. College 2.0 is revenue-neutral for the federal government.
In a nutshell, College 2.0 schools invest in their students by covering their up-front costs, with the expectation that students will provide a return on that investment through income percentage contributions for a set period of time. The College 2.0 Algorithm calculates the right percentage and duration so that the amount of money contributed by graduates covers the costs of students.
But before graduates begin paying back, colleges have to raise the money to fund the first few years of students’ costs (which College 2.0 calculates and provides options for). States have incentives to fund colleges to bring down percentages, or even eliminate them through the State College 2.0 model, and provide incentives for things like graduating on time and working in-state. College 2.0 is revenue-neutral for the federal government.
Q8. What is the interest rate for College 2.0? . . .
There is no interest! College 2.0 students do not take out loans, and are therefore not subject to any interest. Students are only on the hook for their contribution percentage for the duration period set by their school.
Q9. When can students start enrolling at College 2.0 schools? . . .
Schools will transition to College 2.0 at their own pace. FICS America has designed a process for colleges and universities to transition to College 2.0, and the exploratory stage can take a year or more. Once approved for transition by College 2.0, the first College 2.0 students begin with the next incoming class.
For more information on the transition process, see the College 2.0 Institutional Implementation Guide.
Q10. Who can participate? What about current borrowers? . . .
College 2.0 is a solution with the future in mind—tuition prices and student debt are rising at an unsustainable pace. We needed to design a model that would fundamentally fix the underlying problems that led to high prices and debt in the first place, and with that came a need to redesign college finance from the ground up.
Because College 2.0 is such a big change for colleges, the transition is a gradual one. Only incoming students will be eligible for College 2.0. However, we are working on our second policy blueprint, College 1.5, which will address the needs of current student loan borrowers.
Q11. How does College 2.0 fix the textbook market? . . .
Textbook prices have increased over 1000% since the 1970s, far outpacing inflation. Professors overwhelmingly select textbooks based on quality, but not necessarily price. This relationship, in which the person responsible for choosing textbooks is not the one paying, enables textbook prices to increase without impacting demand.
College 2.0 fixes this problem by bundling in educational materials costs into the contributions students make. Academic departments and professors themselves then purchase and distribute textbooks based on that budget.
By doing so, professors must consider both quality and cost, putting schools in a position to negotiate costs with publishers and eventually bring costs down.
Q12. How do schools adopt College 2.0? How would this even be implemented? . . .
Although College 2.0 represents a major change in the way we fund colleges, FICS America has done the heavy lifting to help institutions with the transition process. The College 2.0 Institutional Implementation Guide provides a step-by-step breakdown of the work institutions must do in order to make their degrees permanently affordable and accessible for all.
Q13. How does it all add up? What is the College 2.0 Algorithm? . . .
Although the basics of College 2.0 are simple—students pay no up-front costs and contribute a percentage of income for a set period of time after college—the underlying calculations are extremely complicated.
The College 2.0 Algorithm is FICS America’s custom tool for ensuring that every aspect of each school’s version of College 2.0 adds up. We measure hundreds of data points to design a student experience with the most affordable financial relationship that fosters lifelong success.
To learn more about the College 2.0 Algorithm, please visit the College 2.0 Virtual Pilot page.
Q14. What is the difference between College 2.0 and State College 2.0? . . .
College 2.0 is the new financial model for colleges and universities that eliminates tuition and loans and replaces them with income percentage contributions for a set period of time after college.
State College 2.0 is a modified version of College 2.0 in which states provide funding to make college free, covering the base contribution percentage for students that meet certain requirements at public schools. For any expenses beyond education and textbook costs, State College 2.0 students can take smaller percentages to cover things like room and board and transportation.
Q15. Can the contribution percentage and duration be changed on me once I enroll at a College 2.0 school? . . .
Absolutely not. Unlike today’s traditional colleges that can raise tuition on students without warning, College 2.0 students lock in their rates once they enroll. That means that when students compare colleges, they don’t need to fear that the school can pull the rug out from under them and increase prices.
Q16. Is there an option to opt-out of College 2.0 and pay up-front? . . .
The traditional tuition model we know of today, in which students are charged a certain price up-front, is an outdated relic from a time when only wealthy families would send their children to college. Today, college costs vastly exceed what the average student’s family can afford, which led to the explosion in student debt. College 2.0 was designed to avoid that at all cost, ensuring affordability by spreading out the cost to educate students (who are busy studying and not earning) among a wide swath of graduates who have entered careers. In doing so, College 2.0 provides a steady, predictable revenue stream to colleges so they can provide the best education possible. That stability, which is hard to find among today’s colleges, depends on a thorough understanding of how many grads are contributing and for how long.
No, because College 2.0 simply wouldn’t work with different options for paying. The College 2.0 Algorithm calculates hundreds of data points to make sure graduate contributions add up to cover the expenses of students. If students have an option to pay a lump-sum up front, as students do at traditional colleges with tuition prices, different amounts of students would pay up-front each year. Because of that unpredictablility, an institution would have no way of balancing its funding from year-to-year. An up-front option also opens the door for students to unwisely take out student loans to cover the cost… Furthermore, College 2.0 comes with a host of long-term benefits that work better when the interests of colleges and students align—in College 2.0, when students succeed financially their college does too. The model depends on almost every person paying into the model. If enough students opt out of the plan it will not work.
Q17. If parents still want to pay for their students’ education, can they? . . .
Although the vast majority of students pay for their education through student loans, we understand there still may be parents who wish to pay for their children’s education.
In order for the College 2.0 Model to function properly, contributions must be calculated using each students’ income level and collected automatically. The contributions cannot be transferred to any other individual because the logistics of doing so through the IRS are far too complicated for the number of students we expect to make use of it.
Ulimately, we found that the simplest way for parents to support their children's education (and with least amount of paperwork!) is to simply reimburse them for their contributions.
Q18. What happens if I lose my job, or can only work part-time? . . .
Because College 2.0 contributions are based on a percentage of your income, they immediately pause if you lose your job or your earnings dip below the low-income threshold.
This is possible through the College 2.0 SendSafe program FICS America designed for the IRS, in which contributions are collected directly from earnings (similar to the way income taxes are withheld).
During these periods, the contribution duration pauses and only restarts once you continue earning enough to make contributions.
We determine the low-income threshold using a formula known as the supplemental poverty measure, which incorporates regional cost-of-living for a more accurate measurement of poverty than the traditional “poverty line.”
Q19. What if I end up earning a ton of money? . . .
College 2.0 has a high income threshold so that high earners don’t end up contributing a vastly disproportionate amount toward their education.
We wanted to make sure that College 2.0 schools are an attractive and cost-effective option for those entering potentially high-earning careers.
Q20. Is it fair that some people will end up paying more than others for their education? . . .
When students pay different amounts for their higher education costs, it is generally referred to as “differential tuition.” Today’s traditional colleges and universities almost always have differential tuition—they have a set tuition price, but modify it based upon students’ family income. Even if most students end up paying for college through loans after college, the amount they’re on the hook for doesn’t take into account what they can actually afford, nor is it an accurate reflection of the actual cost of their education.
College 2.0 is vastly more fair; all students at a particular school share the same base contribution percentage. There are no “brackets” in which some people have higher percentages than others depending on income. If a grad loses his or her job, contributions just pause until they begin earning income again, but they are still on the hook for the full duration.
Q21. Why don’t students need to complete the FAFSA to attend College 2.0 schools? . . .
Because College 2.0 automatically covers up-front costs, there is no need for students to complete the FAFSA.
Even with recent changes to the FAFSA, the federal financial aid form is too complicated and problematic for many students. And with delayed information about how much financial aid students eventually receive, the traditional financial aid system is far beyond broken to maintain.
College 2.0 dramatically simplifies the financial decision that goes into choosing a college. Rather than guessing what the student might be expected to pay at each school, students can clearly compare alumnumbers (contribution percentage, duration, and average graduate income) to select the right school for them.
NOTE: If students apply to both college 2.0 and traditional schools, they should complete FAFSA to be considered for financial aid at the traditional institutions.
Q22. What happens if a student transfers or withdraws from the school? . . .
College 2.0 students still have complete freedom to transfer schools or, if need be, even withdraw.
Transfers to other College 2.0 schools proportionately divide percentage contributions depending on how much time the student spends at each school.
Transfers to traditional schools pro-rate the student’s contribution percentage at the original College 2.0 school, so the student is only liable for a smaller contribution based on the shorter time spent at the College 2.0 institution.
Withdrawal works similarly—contributions are adjusted proportionately based on the number of years the student studied at the College 2.0 institution.
Q23. How can my college transition to College 2.0? . . .
The first step is the public announcement of an institution’s interest in pursuing the College 2.0 Model.
The school’s leadership then works with FICS America on the Diagnostic Review, in which we analyze the school’s features (graduation rate, graduate employment, average income, etc) to determine whether it is a good candidate for College 2.0.
Once approved, the school assembles an exploratory committee made up of representatives from every corner of the institution. That committee then sets a base contribution percentage, duration, and a host of other important pieces of the school’s version of College 2.0.
After approval from the college’s leadership, FICS America conducts a Certification Review, combing through the college’s plans and finances to make sure it is fully prepared to transition to College 2.0.
Upon receiving Certified status, the school can begin its transition to College 2.0 with the first cohort of participating students enrolling the next academic term.
As participants begin to graduate and contribute back, the school is able to expand the number of participating students until all enrolled students don’t pay up-front costs and instead use the College 2.0 contribution system.
Q24. How do colleges pay for it? How much does it cost to transition? . . .
Before students begin contributing a percentage of their income, colleges must raise the startup capital to cover the up-front costs for the first cohorts of participating students.
FICS America has identified a number of fundraising options for colleges to choose from (or a combination of several) including investment funds, endowment, bonds, government funding, fundraising campaigns, and debt financing.
Each institution will choose the capital sources that best fit their needs and structure.
Q25. How does College 2.0 cover textbooks? . . .
Textbook and educational materials costs are bundled into the students’ contribution percentages, transferring the responsibility for purchasing to those who already select them: professors.
By aligning the selection and purchasing, academic departments will be able to make choices about which materials to use based on both content and price, enabling price competition that is otherwise absent today. Departments can also negotiate with publishers on price and work on innovative new approaches to providing materials to students.
Q26. What happens to a college’s funding in an economic downturn? . . .
College 2.0 began as a response to the Great Recession's toll on public higher education funding, and was thus designed to withstand economic fluctuations. The College 2.0 Algorithm factors an inflated unemployment rate into its calculations so even in difficult economic conditions, colleges can be sure that they will still be able to meet their costs.
Q27. What kinds of changes will schools need to make? . . .
In addition to raising the startup capital funds, colleges will transition many administrative offices and services to accommodate the College 2.0 Model.
Financial aid staff transition to supporting College 2.0 students, and career center offices build out their services to assist graduates. Academic departments will begin textbook/educational materials procurement, negotiating with publishers and establishing delivery methods for students.
CFOs and financial staff will need to balance the different revenue streams (some traditional tuition, some College 2.0) during the College 2.0 transition period, and CIOs will maintain the proper capital.
Additionally, financial administrators will work with increased amounts of data and facilitate the data’s distribution throughout the institution, so the institution’s financial status can be clearly communicated across silos.
Q28. Does College encourage universities to push students toward lucrative majors and careers? What is Academic Neutrality? . . .
There are many positive aspects of basing college revenue on the income of students—colleges have incentives to help students graduate on-time and find well-paying jobs. But with that new model comes a concern: could colleges push unwilling students toward traditionally lucrative majors and careers?
We knew that there needed to be a counterbalance that protects students’ freedom to study and work in any fields they desire. That’s why we created the Academic Neutrality score.
Academic Neutrality is a concept we coined to represent student freedom to pursue academic and career interests without undue influence in an institutional setting.
As part of FICS America’s Certification process for College 2.0 schools, we study each college’s funding, recruiting, advising, admissions, and career support processes to ensure students aren’t being pushed into certain majors or careers against their will.
Academic Neutrality doesn’t mean schools have to provide equal funding to all academic departments (that would be particularly difficult for specialty schools like polytechnic universities) nor does it interfere with broad institutional goals.
It does take into account trends, like changes in funding to departments before and after implementing College 2.0, to come a fair but objective conclusion about student freedom.
Q29. What is government’s role in College 2.0? . . .
The federal government's role in College 2.0 revolves around the IRS SendSafe program, which if passed by Congress, would allow the IRS to collect and distribute College 2.0 contributions using the existing income tax system. However, there is room for the federal government to provide financial support to institutions transitioning to College 2.0, should there be the political will. Such support could make the difference between whether or not some institutions make the transition, and the investment would be well spent given the positive economic effects and reduction of student indebtedness.
Q30. Is this a Republican or Democratic issue? . . .
Neither! FICS America is a nonpartisan organization and crafted College 2.0 without any allegiance to particular parties or ideologies. College 2.0 is an evidence-based plan, as illustrated by the 300+ sources cited in the Annotated College 2.0 document. Ultimately, FICS America's goal was to craft a 21st century solution that would make college permanently affordable and accessible for all. When you take innovative approaches to solving policy problems, they can rise above the political fray and garner broad support.
Q31. How much does College 2.0 cost the government? . . .
On the federal level, FICS America designed College 2.0 to not require the federal government to spend any more than it currently does.
For states, College 2.0 is flexible enough to accommodate any budget. States prepared to fully-fund public higher education can adopt the State College 2.0 model, which covers the base contributions of qualifying students. Other states can make more modest investments, either through additional institutional funding or in-state contribution decrease incentives for graduates.
Q32. What legislation is necessary? . . .
College 2.0 requires two primary pieces of bipartisan federal legislation:
1) Authorization for the creation of a revenue-neutral College 2.0 SendSafe office of the IRS to collect contributions using the existing income tax withholding system.
2) Extension of GI Bill benefits so veterans can attend College 2.0 institutions.
Q33. Why can’t we just encourage states to fully fund public universities? . . .
We can! That’s why we developed State College 2.0, a version of College 2.0 in which states cover students’ base percentages.
Rather than making students take out loans to cover the rest of their expenses, as many other free tuition proposals do, College 2.0 students can cover any additional costs with percentage contributions once they graduate. Not all states can be reasonably expected to fully cover students’ costs, so we made sure College 2.0 came with the flexibility be implemented by any institution regardless of where they are.
Q34. What is FICS America’s political/ideological affiliation? . . .
FICS America takes pride in its independence from political and ideological affiliation.
We do not endorse any political party nor do we consider ourselves an ideologically-aligned organization.
Our policy blueprints are founded upon a straightforward approach: using innovation and evidence to solve problems and improve the lives of all.
Q35. How is FICS America funded? . . .
The development of College 2.0 was entirely self-funded. Along with the help of family and friends, we dedicated our own time and money to support this project from start to finish. Every FICS America team member is a volunteer, and we deeply believe in College 2.0's potential to positively transform the college experience for students. FICS America’s only external affiliation is with our fiscal sponsor, OneOC, a nonprofit startup incubator in Orange County, CA that handles many of our administrative and acounting tasks.
Please consider supporting FICS America's ongoing work by visiting our donate page.
FICS America is also currently pursuing grant funding and partnerships. Please contact us for more information.
Q36. What is FICS America doing next? . . .
Our next project is College 1.5, a plan redesigns the use of federal financial aid funding. As we prepare that plan, we will work with colleges and universities across the country to transition to College 2.0.
Q37. How do I get involved with FICS America? . . .
FICS America is a nonprofit organization made up of individuals passionate about redesigning America for a better future.
If you would like to get involved, contact us here, and please consider making a donation to support our continued work.