Sarah Carracher
News Editor
Oregon’s state legislature has approved a radical new pilot program to ease the financial burden on college students. Under the Pay It Forward, Pay It Back Act, students can attend college in exchange for paying a percentage of their annual income to the government for 24 years after graduating.
The option, which has been hailed as a possible solution to the nation’s student loan crisis, will be available to Oregon residents who attend a state university or college. Though the numbers have yet to be set, the Oregon Working Families Party, which pushed the bill, proposed that graduates pay three percent of their paycheck for a four-year college and 1.5 percent for a two-year college. People who attended the school but did not graduate would pay a prorated portion.
The pilot program would be an immense relief to college students and their families, who frequently resort to high-interest loans to pay tuition. The plan’s designers hope for it to be up and running by 2015.
“By placing a limit on the amount students pay … new graduates wouldn’t be burdened with excessively high monthly student-loan payments, and would be able to commit greater amounts of their income to economically beneficial activities,” wrote State Rep. Brendan Doyle in a memorandum on the bill to the Pennsylvania House. U.S. Senator Jeff Merkeley (D-OR) introduced a similar bill to Congress in August.
Some have speculated that it could become a problem for graduates who are unable to find jobs. “It’s very appealing for students,” said Wooster student Nicu Istrate ’15, “as long as they get a job.”
Though the program is in its earliest stages of development and this issue has not been settled, the Oregon WFP proposes that they simply do not pay while they are unemployed. “When you start making income again, your monthly contributions to Pay It Forward will continue as normal,” its website says.
The relatively short timeframe of the payments is one of the plan’s most appealing aspects. “I know a lot of people end up paying for a long time after college,” said Katie Greenslade ’16.
The payments would, unlike loans, not accumulate interest and maintain their affordability for the duration of the payments. “It would be more manageable for your income,” Greenslade said.
The plan has drawn criticism from some members of the business world. “The Oregon plan could suffer because it might turn off students with the biggest earning potential, for whom traditional interest rates would be preferable to promising a share of future income,” said Dave Girouard, the CEO of crowdfunding site Upstart. “What you don’t want is a program filled with people who don’t intend to work as hard or have a bias toward earning less money.”
U.S. News & World Report blogger Isaac Bowers suggests that the percentage graduates pay should be progressive, so that those who make more money would pay a higher percentage than those who make less. He also encourages legislators to ask if the plan would constrain or exacerbate the consistently rising costs of tuition.
Sources: The Chronicle of Higher Education, PolicyMic, U.S. News & World Report