Oregon’s Attempt at “Free” Tuition (by Guest Blogger Sean Kersey)

Park BlocksOn June 27th of this year Oregon’s Senate passed the House Bill 3472 – being dubbed the “Pay it forward; Pay it back”.  This bill was in response to the issue regarding college student debt and their loans, after the Federal Government opted to not extend the lower federal student loan interest rates.  This bill acts as a way for a student to go to college, taking out no loans and having no debt, and then repay the state through Oregon receiving 0.75% of your annual income per year of schooling.  This idea was brought about from a group of senior students at Portland State University during a Senior Capstone project focusing on student debt.

While the idea of no debt is fantastic, I personally have tons of financial aid debt looming over me, I feel like just changing the name of a loan into something else still doesn’t take away the fact that school is not affordable for most.  Under this plan the student still has to land a job after school, something of an increasing problem, and then still have these payments to make.  The debt doesn’t go away, it is just renamed.

I did find two upsides to this plan though.  First is the issue of how financial aid loans are handled now.  Currently I do not know who is in charge of my loan.  They have been given to other companies or redone so many times I can not remember who has them now.  Banks are profiting on me at the end of my schooling career.  With this plan I only have to worry about the state of Oregon and ensuring they get their money, which goes right back into the community and schools in the state.  I am not the only college student with this issue.

The second upside is this can get high school kids who are afraid when they see the initial cost of higher education and maybe create more desire for them to apply and enroll.  Increasing the number of college graduates through this could be beneficial for many reasons.

 Questions:

So what are your thoughts?  Are you jealous at this possibly being an option in the future while you are paying back your financial aid?  Or do you think this plan is just another in a long list of ideas that don’t really solve the issue of affordable education?

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14 thoughts on “Oregon’s Attempt at “Free” Tuition (by Guest Blogger Sean Kersey)

  1. I like it! It gives folks who want to go into lower paid professions – like teaching or social work for example – some hope. Too many kids are forced into giving up their dreams of going in to a field that would be of benefit to society because it just won’t pay enough to make it financially feasible. Now, your employment status and income are not necessarily considered when your repayment schedule is set up and you pay until the balance is zero, no matter how long it takes. This plan has folks making more as a result of their education, paying more. It also keeps the repayment period to a reasonable time frame allowing everyone to KNOW when they will be free of this debt – no longer an open-ended and potentially life-long burden.

    • I agree Andy, that ability to get more people into those lines of work is a great benefit of the plan. I am currently in school to be a teacher which I know is not going to pay the same as some other professions so taking loans was always a bit of a stress. Although knowing the end date to when I could pay off my loan is nice, 20 years still seems like a lifetime.

  2. I think its a great idea. .75% of your income is way less than the standard repayment plan for student loans currently. And you will only be required to pay that amount for 4-6 years(or however long it took you to complete school), rather than 10 or 25 years of making payments. I’m looking at over $1000 a month payments for what I will have to take out in loans to finish graduate school… That will be much more than .75% of my projected income.

    It doesn’t solve the problem with the cost of education in the US. Or take into consideration the fact that tuition rates, and now insurance requirements are continuing to rise, but it seems like a nice alternative to the status quo.

  3. I feel that free education should be a priority in the United States. The U.S. is rated much lower than other 1st world countries in the areas of literacy, math, and science, and the reality is that there are jobs out there and not enough educated people to fill them. There are so many problems with our education system, and this solution may be a slight boon to it, but it still doesn’t solve the issue. A few things need to happen to fix the problem at hand: increased taxes (for higher pay grades and oil monguls); higher funding for education; an earlier start to educaion; and free college for those who test into it. As it stands, this list is impossible. Hopefully we’ll see a change to the current state of politics, but it’s extremely unlikely.

  4. Steven,

    When I read, “I feel like just changing the name of a loan into something else still doesn’t take away the fact that school is not affordable for most.” I was so glad that I wasn’t the only person thinking this.

    My concern lies with the fact of not knowing who is in charge of our loans. This seems eerily similar to how the housing crisis started.

    I do like your point that it will make college seem more realistic for many incoming high school students, which is great. As you also mentioned though, getting a job right out of college that is based off of your degree isn’t easy. I know quite a few people with college educations and impressive resumes, and yet still they are struggling to find employment.

    Until higher education becomes legitimately more affordable, name it what you will – student debt is still going to be crushing.

  5. I like the others, also like the idea. I also in debt with a lot of loans but I would want to know when I’ll be done paying for the loans, even thought I’ll probably be dead by then but it gives me some “hope. l also like the fact that this method will give high school students a realistic idea of what they will be able to afford and how much tuition will be, not only for high school students but for their parents.
    At the end, I feel we all wish education would be more affordable and even dream of being “no cost” to us, but then again; I’m probably dreaming to high!

  6. I like the idea, but I do have quite a few questions. If only .75% of our monthly income is going towards the cost of our education, who is making up the rest of that cost? I haven’t looked into this much so if someone has this answer I would love to hear it. I had no idea that this idea originated right here at PSU! That is pretty cool.

    • Yeah, that was concerning as well. Especially as the program is in its first years when no one is paying these loans back, who is getting that bill? I assume tax payers will have to pick up some of the slack but I don’t think that would cover it.

      • I assume the difference will have to be covered by tax payers as well. Which is the same way all the federally guaranteed loans that are defaulted on because the payments are ridiculous get covered. I was putting that cost down as an investment in the future of our society. I was also picturing the taxes those folks with degrees they would not otherwise be able to afford as helping to foot the bill.

        It is important to spend public funds as wisely as possible and to question where/how we plan to fund new social programs. That does not mean we ignore things that need to be done and programs with greater benefits than costs – even if those benefits are not of the concrete variety. We are not ever going to effect change by keeping things the same.

      • That’s kind of what I was thinking as well. Hmmm. The idea itself sounds pretty good, although there could be a lot more to it than we understand. I guess we will have to see how it goes!

  7. Sean,

    I like what you have to say about “Pay it forward; Pay it back”. I, like you, have a lot of loans that I will have to pay back as soon as I get out of school, and I like you mentioned it is really hard to get a job after you graduate. My wife was done with school a year ago and just now got a job. So I see the problem with paying it back after you graduate can be tough if you cant find a job, just like paying our loans back. Again, going off of what you said, it would give so many high school seniors who cant afford college hope to be able to go.

    I believe that this would definitely help out, and I do think I am a little jealous because interest rate on loans are going up next year and I already owe so much money. Also, I didn’t come from a family who could help me pay for school so it is all on me. I work full time and go to school full time, on top of having a family; so if I didn’t have to worry about trying to pay for school and I could wait to pay it back after I graduated, that would be such a huge blessing! I think “Pay it forward; Pay it back” could really help a lot of people.

  8. Because it is so new, I am a little iffy about it. I remember seeing a story on the news about it, and another plus side it you only have to pay back the 0.75% amount for 24 years after graduation. After that, you are free of all debt. However, there have been many cases of people now who consistently pay the right amount back and after about ten years of paying back loans they free you of all debt because you have been consistent and reliable. It all is about the same, except, like you mentioned, you don’t have that huge tuition amount taunting you as you have to pull money out every term from the government. I think trying it on just PSU, which I think is the plan, would be smart, just to see if it really would work better and help people out more. In the case of saving us money, it sounds like school would be overall cheaper, but I honestly don’t know if it would be.

  9. Sean I am to extremely scared about when I am done with school what my debt will be. I have two states to pay back because I started off in California for school and finished my last two years here at Portland State but I have three schools total I have to figure out to pay back. I really hope they can figure out a program like this to help students not have debt when they finish school even though I get to miss out on this but I know a lot of people who did not go away to school or are still at the Junior College because they are afraid of taking out loans to pay for school. It is also frustrating because of how much we are paying for school and how hard it is to get classes and finish up in a timely matter which is the major reason I left California because I was paying the same amount and more then I am paying for out of state fees here and I was taking random classes that didn’t count for anything because I could not get into my classes. One question I have with this plan though is what about the out of state students do we miss out on this opportunity and are they trying to find a way so we can pay less because I pay between 20,000 to 30,000 a year depends on how many classes I take so you can just imagine my loans because I do not qualify for all the grants due to being out of state? I think there needs to be a plan on how all students won’t have a huge amount of debt.

  10. I would much rather prefer dedicating a small percentage of my income in paying back my student loans than to feel restrained by the loans we currently have in our financial system. The burden of having to pay back our student loans with the financial system we have now, I believe weighs heavily on students as future job-holders. I think that student loans pushes graduates to frantically find jobs that may not even be there and because of that, graduates could face a financial crisis or settle for a job they dislike. I’d like to think that this legislation will recycle the revenue within the state and to cut out the banks as the “middle man” with its high interest rates that direct revenue outside our communities. I don’t think one legislative measure will solve the national issue of affordable education, given that we are still paying high educational costs; however, by cutting out the banks and recycling revenue within the state for example, certainly helps us become more economically efficient.

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