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Proposed natural gas tax would fund college costs for low-income students

Published September 12. 2013 05:00PM

State Sen. Daylin Leach (D-Montgomery/Delaware) introduced legislation, co-sponsored by state senators John Yudichak (D-14) and Jim Ferlo (D-38), that would allow eligible students to attend college in Pennsylvania without worrying about the burdens placed upon them by traditional financial aid.

"Statistically, success in higher education is an important indicator of an individual's ability to succeed in a competitive job market," Leach said. "Our current system results in 70 percent of Pennsylvanians graduating from college or university with an average total student debt of $30,000. Both of these numbers are higher than the national average. We have a responsibility to ensure that our young people have the chance to start their professional lives on sound financial footing, and this legislation does just that."

Senate Bill 1094, establishing the Pay It Forward Pay It Back Pennsylvania Program, would provide interest-free loans to Pennsylvania students whose families meet certain income criteria. For instance, if a family's income falls below 300 percent of the federal poverty level, the student's full tuition would be covered under the plan. Students of families earning between 300 percent and 450 percent of the federal poverty level would receive funding for 66 percent of their education, and students of families earning between 450 percent and 600 percent of the federal poverty level would receive assistance for 33 percent of tuition costs.

Leach said that initial seed funding for the Pay It Forward Pay It Back Pennsylvania Program would be obtained by placing a five percent natural gas severance tax on every unconventional well in the state. Pursuant to the legislation, the Pennsylvania Higher Education Assistance Agency (PHEAA) would submit a report to the General Assembly every three years examining the financial stability of the fund. If the fund is found to be sufficient to sustain the program, PHEAA may offer recommendations to reduce the natural gas severance tax. Conversely, if the fund is found to be insufficient, the agency may advise an increase of the tax.

Leach noted that his legislation differs from similar bills in other states because it would not designate a set length of time for repayment. The bill would instead require that borrowers make small, income-based payments beginning 36 months after graduation until the amount borrowed is repaid in full. Additionally, students would pay a small amount of money into an insurance account that would act to prevent against loan default. This system of repayment, Leach said, is unique because students would only pay back what they borrowed and no more, which may not always be the case under other plans.

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