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Oregon Legislature Approves "Pay It Forward" Pilot Program to Help Students Pay for College

July 10, 2013

Oregon lawmakers unanimously approved a bill (HB 3472) that instructs the state's Higher Education Coordinating Commission to design a pilot program to evaluate a new college funding system known as "Pay It Forward." Under the proposed model, students would commit a percentage of their future incomes to repay the state, instead of paying tuition or taking out traditional loans to attend community colleges and universities. The bill currently awaits the signature of Gov. John Kitzhaber.

If the bill is signed by Gov. Kitzhaber, the pilot program may take several years to launch due to procedural and practical hurdles according to the New York Times. First, the Higher Education Coordinating Commission's proposed pilot program would have to address issues related to the size, structure and funding source of the pilot program. Once those concerns are addressed, the pilot program's design would have to receive legislative approval. In a Washington Post article, Dylan Matthews looks at other long-term issues related to a universal pay it forward model including initial startup cost (estimated at $9 billion in Oregon), the potential effects of a "buyout option" and earning differentials between majors (e.g., engineers as compared to art history majors).

Advocates, however, argue that the pay it forward model provides a potentially self-sustaining model to provide low-cost education and workforce development that also addresses the growing burden of student loans on the U.S. economy. The burden of student loan debt already is discouraging many younger Americans from engaging in entrepreneurial activity, according to a recent study by the Young Invincibles, a nonprofit youth advocacy organization. Almost 23 percent of 9,500 surveyed respondents indicated that they had put off starting a business because of monthly student debt payments owed to private lenders.

Oregonhigher ed, workforce