This week the Oregon Senate passed a bill that would create a fund allowing it to bypass traditional student lenders by giving free tuition to students who then pay it back with a deduction from their paychecks after they graduate, according to the Associated Press.
H.B. 3472, which has already passed Oregon’s House, creates a pilot program called “Pay It Forward, Pay It Back,” which would allow Oregon’s in-state residents to attend the state’s public colleges and universities without paying tuition or taking out loans in exchange for signing a “binding agreement” to pay 3 percent of their paychecks after graduation for a “specified number of years” — about 25. The bill also establishes seed money for the program, which could exceed $9 billion.
The Wall Street Journal reported that the program was the brainchild of a Washington state-based think tank called the Economic Opportunity Institute (EOI), which purports to create ideas to help middle-class families. The group’s October 2012 paper proposing the program said that “Pay It Forward” had several benefits:
First, it entirely removes up-front tuition barriers to attending college. Second, after the transition to Pay It Forward is complete, the system is not only entirely self-financing – it also supports successive net increases in college enrollment, making higher education both more affordable and accessible for succeeding generations of students. Third, by linking payments to students’ ability to pay, Pay It Forward allows graduates to chose work based on their interests and skills, rather than solely on financial conditions. And finally, students retain access to federal financial aid to cover their cost of living, books, etc.
And though the paper promises that such a program could dramatically change how college is paid for, it emphasizes that “it cannot replace existing public support from the state legislature.”
This model is inspired by United Kingdom and Australia’s income-based repayment systems, as well as President Barack Obama’s federal income-based repayment program.
Sponsored by a bipartisan group of state representatives — Republican Rep. Gene Whisnant, Democratic Rep.Chris Harker and Republican Rep. Vic Gilliam — the Senate passed the bill unanimously on Monday and it is expected to be signed into law by Gov. John Kitzhaber. The bill was also backed by Washington’s Working Families Party, which calls “Pay It Forward” a “social insurance program, not a loan.” Whisnant and Gilliam previously opposed legislation that would allow undocumented students to pay in-state tuition in Oregon.
The National Center for Education Statistics estimated tuition last year at Oregon’s flagship university, the University of Oregon, to be $9,310 a year for in-state residents, which, as EOI wrote, has grown to 22 percent of Washington state’s median income from about 10 percent a decade ago.
Diane Saunders, director of communications for the Oregon University System, told the University of Oregon’s student newspaper, the Daily Emerald, “The golden age of funding for education is long gone. We’re looking for a solution to both the struggles of students paying for college, as well as trying to fix Oregon’s budget.”
The bill was passed on the same day that some federal student loan rates doubled from 3.4 percent interest to 6.8 percent.
[“Stock Photo: An Asian Teenage In Blue Graduation Gown And Smiling While Hold Us Money” on Shutterstock]