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Pay-later tuition proposed for Oregon colleges

Discussion in 'BBS Hangout: Debate & Discussion' started by pirc1, Jul 11, 2013.

  1. pirc1

    pirc1 Contributing Member

    Dec 9, 2002
    Likes Received:
    This sounds interesting, I am not sure how I feel about this yet, I might have a better idea if they put it into practice for a few years.


    By Diane Dietz
    The Register-Guard
    PUBLISHED: 12:00 A.M., JULY 4

    Oregon will take a look at a whole new way of funding its seven state universities if the governor signs a bill approved this week by the Legislature.

    The plan would allow students to attend state colleges without paying tuition or taking out traditional loans. Instead, they would commit a small percentage of their future incomes to repaying the state; those who earn very little would pay very little.

    Proponents are calling it the “pay it forward” model with new graduates effectively helping to cover college costs for the generation coming along behind them.

    The evermore burdensome tuition and fees that Oregon students spend decades paying off after leaving school would be abolished.

    “It’s empowering the state to actually do something about student debt; so many of the problems related to student debt are federal issues,” said Steve Hughes, state director of the 7,000-member Oregon Working Families Party.

    House Bill 3472 — now on Gov. John Kitzhaber’s desk — directs the Higher Education Coordinating Commission to study the “pay it forward” model of funding, and, if it has merit, to design a pilot project for the 2015 Legislature to consider.

    As an alternative to the pay-it-forward, no-tuition model, the bill also requires the commission to analyze whether the state could make a guarantee to students that their tuition wouldn’t go up during their four years at a state university.

    The bill won approval of every lawmaker in both chambers in votes during the past week — with the singular exception of a lawmaker who had an excused absence for the day.

    “It’s an indication of just how widespread the concern is about the problem of student debt,” said state Rep. Michael Dembrow, a Portland Democrat who championed the bill.

    The measure arrives in a time of heightened worries about the enormity of the debt with which graduates begin their independent economic lives.

    Oregon university students who take out federally backed loans leave school with an average of $24,616 in debt, according to the Oregon University System’s 2012 Factbook.

    Oregon is ranked 17th among states with the highest level of student debt. New Hampshire is worst with $32,385 per university student; Utah is best with an average debt of $16,317.

    Student loans, meanwhile, have gotten more costly in every state.

    The interest rate on federal Stafford subsidized loans doubled to 6.8 percent this week, up from 3.4 percent. The change is expected to cost student borrowers an additional $2,600 in interest on their college loans, according to the congressional Joint Economic Committee.

    Congress fumbled an attempt to block the increase for another year, although lawmakers plan to return next Wednesday with an attempt to reset the interest rates lower.

    The spike affects 7.4 million students nationally.

    The federal debt figures do not include a substantial sum of private loans taken out by parents on behalf of students — or borrowing by students through private lenders.

    “We talk to students who have debt of $40,000 or $100,000. It’s pretty remarkable what’s going on,” Hughes said.

    Under the bill, the higher education commission would design a “pay it forward” system.

    That would allow university students to enter into a binding contract with the state to pay 3 percent of their income for 24 years into a higher education fund, according to Oregon Working Families estimates.

    Graduates making $30,000 a year would pay $900 a year; graduates making $60,000 a year would pay $1,800 a year; and so on.

    “It’s had a lot of success in Australia. They had a system like that in place for quite a while,” Dembrow said. “It’s a great notion.”

    Now’s the time for education funding that’s completely different, Hughes said.

    “We need to fundamentally alter how we think about education. This is the first step to doing it,” he said. “We need to start down the path because what we’re doing right now is absolutely crazy, and it’s not only bad for graduates and students, but it’s bad for the economy.”

    Less would be spent overall in paying for education, Hughes said.

    “The advantage is, all (payments are) going to the cost of the program. What we were really trying to get at is eliminate the role that banks are playing in charging interest and fees to students,” he said.

    Some University of Oregon students have questioned whether the pay-it-forward plan would do any good if the state does nothing to control the cost of education. Soaring university costs would push the percentage of income that graduates pay to keep the program solvent ever higher.

    “It just defers it to a later point in time,” said Sam Garner, a philosophy major and member of the League of Educators and Students Slashing Tuition. “Student debt would continue. It doesn’t adequately address the issue.”
  2. CometsWin

    CometsWin Breaker Breaker One Nine

    May 15, 2000
    Likes Received:
    Sounds possible they would never pay back the cost of the loan just by the math. I don't think 3% of the salary would work. I think the Federal repayment is like 10% for 10 years then the remainder is forgiven. At least they're trying something.
  3. Refman

    Refman Contributing Member

    Mar 31, 2002
    Likes Received:
    I suspect that 3% for 24 years may work. Sure, you'll have some that make $30,000 a year only paying $900 per year. Over 24 years, you will have some that become successful PI attorneys or CEOs, etc making seven figures paying in a lot more. Once fully implemented, you will also have 24 years worth of graduates paying in for every years worth of students. You'll have vastly more people paying in than are taking out for tuition.

    One thing to consider. This is not a loan. This is an agreement to pay for 24 years into the education fund of the state in exchange for not paying tuition and avoiding student loans while you are in school.

    We have to try something, and it will likely have to be a fundamental shift in how college is paid for. We have an entire generation that is being crushed by enormous student debt and that is stifling economic growth.

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