Comparing college costs: Pay it forward

A new plan out of Oregon may be the future of financing higher education.

Luis Ruuska

As college students, we worry about the loans we’re going to have to pay back. While homework and jobs may be enough on our minds, paying tuition is a constant reminder of the high price of a college education.

With student debt at an all-time high, many students are finding their four greatest years are saddling them with a lifetime of debt.

Although most students are assigned a specific debt repayment plan, many are unaware that they can actually opt out of that plan for another if they so choose.

The U.S. Department of Education has seven debt repayment plans, each with advantages and disadvantages. Generally, most of them either have a set repayment period of 10 to 25 years, in which student loan debt is paid off in monthly payments at a fixed rate, at a rate relative to the payer’s income or at a rate that accommodates any financial hardship that the payer may have.

These plans do absolutely nothing to cut debt for graduates, as astronomically high interest is still in play, and only a few plans offer debt forgiveness after 15 to 25 years or after 10 years of public service.

However, one state has recently proposed a new plan that will essentially eliminate student debt altogether and could be a model for what the future of financing higher education should be.

In July, Oregon’s Legislature unanimously approved the state’s Higher Education Coordination Commission to develop a tuition payment plan called “Pay It Forward.”

“Pay it Forward” is a social insurance program like Social Security, but for college students.

In the plan, Oregon students will be able to attend public community colleges and universities for free. Once students graduate, they are required to annually pay a fixed portion of their adjusted gross income for 24 years.

Graduates with associate’s degrees would pay 1.5 percent, 3 percent if they have bachelor’s degrees or 4 percent under master’s degree programs.

By the end of the 24-year period, the state estimates that each graduate will have paid as much as they would have had to pay without the program.

It’s important to note the program doesn’t eliminate the need for financial aid entirely. Students could still use state and federal grants to pay for living expenses and other secondary required course materials, but their tuition and fees would be completely taken care of otherwise.

Oregon acknowledges this plan isn’t perfect. It’s estimated it would take 25 years for Pay It Forward to build a positive balance. However, the state also acknowledges the plan is one of shared responsibility. Its success depends on everyone’s desire to, well, pay it forward for the next generation’s college education.

No other state currently has a program like this, though several legislators have expressed interest.

The reality is the plan is too radical for most Americans right now. Some go so far as to mistakenly label “Pay it Forward” as socialistic.

This couldn’t be further from the truth. Only students and alumni will fund the program — what could be fairer than that?

I’m marveled by the concept of people coming together to essentially crowd-fund a common higher education pool.

The commitment of previous generations to pay their dues toward the state’s higher education system will allow future students to focus less on debt and more on making the grade.

A 2012 survey by the nonprofit Inceptia showed college students were most concerned about repaying loans, the cost of education and borrowing money for college.

A program like “Pay It Forward” puts these concerns at ease. Instead of picking up one or more part-time minimum-wage jobs, students will be able to take internships and co-ops without worrying about money.

Instead of worrying about where they’re going to find the money to make this semester’s payment deadline, students can direct all of their focus toward their studies.

What’s so radical about all of us taking care of one another to secure a better future for all of us? What’s so radical about returning students’ main focus to learning in college and not paying for college?

Education is our greatest tool for paving the way to a progressive future, and if we make it more accessible and desirable to everyone, we can make that future a reality.