Would you do it? Free college now, paycheck deductions later

Would you do it? Free college now, paycheck deductions later »Play Video
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EUGENE, Ore. - The so-called Pay It Forward bill would allow students to go to college in Oregon for free.

For now.

"What they would do is they would actually commit to take a portion of their gross income and pay it back," said Phil Weiler, spokesperson for the University of Oregon.
     
Here's how it bargain would work: Students go to college tuition free. After they graduate, they pay a fixed 3 percent of their post-graduation paychecks back into higher education in Oregon for 25 years.

"I think it's useful," said Chi Nguyen. "I mean a lot of people would like to go to school."

The proposal still needs fine-tuning: How much would it cost to start the program? What if a student transfers out of state - or flunks or drops out?

Plan would make tuition free at Oregon colleges
STEVEN DUBOIS,Associated Press

PORTLAND, Ore. (AP) — On college campuses across the United States, the eternal optimism of youth has been throttled out by a fear of crushing student debt. That's certainly the case in Oregon, where the cost of tuition has soared as public funding for higher education has declined.

But the state Legislature this week approved an idea that might ease the economic dread for future philosophy and art history majors. The concept — called Pay It Forward — calls for students to attend public universities tuition free and loan free. In exchange, students would have 3 percent deducted from their post-graduation paychecks for about a quarter-century. The money would go into a fund to pay for future students.

The bill, which passed unanimously and is expected to be signed this month by Gov. John Kitzhaber, directs the state's Higher Education Coordination Commission to develop a Pay It Forward pilot project for consideration by the 2015 Legislature. One question that must be resolved is how to fund the program's start-up costs, estimated at $9 billion, since the initial students who attend tuition-free would be years away from entering the labor force.

Though the timing was coincidental, the bill won final approval on Monday, the same day that federal student loan interest rates doubled from 3.4 percent to 6.8 percent.

"I feel as if the problem of student debt has reached a tipping point. It's on legislators' minds," said state Rep. Michael Dembrow, D-Portland. "And I think it's on legislators' minds because it's on their constituents' minds. This is something we're hearing a lot about — at the doorstep, through our polling, through our e-mail."

The Pay It Forward concept was originated by the Economic Opportunity Institute, a nonprofit policy group in Seattle, and is based in part on a model used in Australia.

A classroom of students from Portland State University, along with the Oregon Working Families Party, successfully lobbied legislators. Supporters say the challenge is just beginning. They must ensure the commission comes up with a pilot program that helps students and clears the 2015 Legislature.

"This is going to happen because students demand change; I believe that firmly," said Steve Hughes, state director of the Oregon Working Families Party. "The conditions are just absolutely ripe for this. We've heard so many stories of student debt that are just beyond belief."

If the plan does take effect, it would provide some relief to students who are unable to translate their degree into a decent-paying job. For example, a student whose adjusted gross income is $600,000 over a 24-year span would pay $18,000 for his or her four-year degree. A student who makes $2.5 million over that same timeframe would end up paying $75,000. Someone who makes nothing at all would contribute nothing to the fund. Someone who makes a billion would contribute an astronomical amount.

"This is not a loan," said John Burbank, executive director of the Economic Opportunity Institute. "You're paying forward, essentially, so your contributions would enable the next generational cohort of students the same free access."

Students who graduate from a two-year college would have 1.5 percent, instead of 3 percent, taken from their paychecks, according to the plan. Those who attend some college but fail to graduate would pay a pro-rated portion of their incomes.

Oregon is the first state to take a step toward the Pay-It-Forward model. Burbank said legislators in other states, including Washington, Vermont, New York, Pennsylvania and Wisconsin, have expressed an interest.

Copyright 2013 The Associated Press