Pay It Forward debt-free degree plan makes national debut as Oregon lawmakers tackle student debt crisis

July 8, 2013 | Economic Opportunity Institute

Oregon's innovative "Pay It Forward" debt-free degree plan has grabbed the national spotlight

Oregon’s innovative “Pay It Forward” debt-free degree plan has grabbed the national spotlight. (Photo: Erik R. Bishoff via Flickr)

Washington legislators are (rightly) proud of the one-year tuition freeze included in their recent budget deal – but Oregon has upped the ante with legislation that could reduce up-front payments for higher education tuition in that state to $0.

That’s right: Zero. Zilch. Nada.

Last Monday, the Oregon legislature unanimously passed HB 3472, directing Oregon’s Higher Education Coordinating Committee to examine and propose a “Pay It Forward” pilot program designed to provide access to a debt-free degree for all students and full funding for public higher education.

Here’s how Pay It Forward works: there are no upfront tuition fees to attend college – the primary driver of student debt. Instead, students pay a small percentage of their income for 20 to 25 years after graduation: around 1.5% for a two-year degree or about 4% for a four-year degree. (Specifics will vary depending on the finances of the state or institution implementing the plan.

Pay It Forward offers students and their families a pathway to a college degree without the burden of student debt; instead, the payments contribute to a trust fund that eventually becomes self-funding, covering tuition costs for future students. Oregon’s proposal has vaulted that state into national headlines, with articles in the New York Times, Wall Street Journal, and Associated Press, (among many others). Here’s EOI’s Executive Director John Burbank on Fox News Boston this morning, explaining the “Pay It Forward” proposal – watch it here:

john burbank on fox news boston

The Pay It Forward policy idea was originally developed here at EOI, which then worked with Portland State University students to design a proposal for Oregon. The Oregon Working Families Party, the anti-poverty group Jubilee Oregon and the PSU students championed Oregon’s legislation. EOI will work with Oregon’s Higher Education Coordinating Committee in the coming year to develop the pilot program, which will be submitted to the 2015 legislature for approval.

Oregon’s action – on the same day that federal student loan interest rates doubled – makes it (so far) the sole state to start de-escalating the student debt crisis. But that may change soon.

Rep. Larry Seaquist (D-Gig Harbor), Chair of the Washington state House Higher Education Committee, wants his state to examine Pay It Forward as well: “The burden of student debt is at a crisis level – and no wonder: cuts in state funding have driven tuition costs out of reach. Pay It Forward represents a real opportunity to make college affordable again for Washington’s students.” State leaders in California, Vermont, and New York also have shown interest in the plan.

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Posted in Education, Higher Education

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