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Oregon's 'free tuition' plan and what it really means

Oregon's 'free tuition' plan and what it really means


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SALEM, Oregon — A radical new idea for how to make college more affordable and still keep the system running has emerged out of Oregon and garnered headlines across the nation. But what does it really do? And will it really work?

The idea, called Pay It Forward, Pay It Back, is simple enough: Rather than pay tuition up front while you are in school, those who attend college in Oregon would initially pay nothing. Not one cent of tuition. However, they would sign a binding contract requiring them to pay back 3 percent of their annual income to the school for 24 years after graduation. The money paid back would be used to pay for the education of the next set of students in an ongoing and self-perpetuating cycle.

Technically, tuition would not be eliminated, but only delayed and indexed to income.

That's the idea, at least.

“It’s unbelievable that it’s all happened so fast,” Ariel R. Gruver, a student who proposed the idea to the Oregon legislature, told the New York Times. “We never imagined that we would actually accomplish something like this, and definitely not in such a short time.”

To give you some idea of the costs of Pay It Forward, after graduation, someone who makes only $40,000 would be paying $1,200 each year back to their school, whereas someone who lands a $100,000 job would be paying $3,000 every year. Though no plan has been officially hashed out, the real calculation would likely be more complicated and based on an Adjusted Gross Income.

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The policy has been hailed by education rights activists and students. Many say it would give low-income individuals much more open access to education without the burden of exorbitant loans. The progressive impetus behind the plan, making those with higher incomes pay more for their school, has also garnered praise. But the plan has its detractors, as well.

Actually, there is no official plan of any kind to implement Pay It Forward. The Oregon Legislature recently passed a related resolution that does nothing more than ask a commission on higher education to consider creating a pilot program at one or more universities and submit a proposal before 2015. It also asked the commission to start finding funding for the initial pilot program. So any sort of movement on the idea is years away.

There are also serious costs involved. The Washington Post reported that the initial costs of such a program would be roughly $9 billion, all just to get the program self-sustaining over the next 15-20 years.

Finding that $9 billion is one of the foremost challenges. Sara Goldrick-Rab with The Century Foundation think tank has written a critique of the plan, claiming that getting the money will be highly unlikely.

"While proponents in Oregon suggest that the $9 billion needed to start the program could be raised through state bonds, they require voter approval and of course also must be repaid," she wrote in a blog post. "Moreover once the money is distributed, the state must ensure that students repay."

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Moreover, Goldrick-Rab points out that debt would not be eliminated by the plan. Cost of living, books and some other fees would not be free, meaning that some amount of debt is still likely for many students, as those costs can rise to tens of thousands of dollars. They would then be paying back loans on top of their 3 percent delayed tuition fee. Proponents point out that Pell Grants and other forms of scholarships could help with costs like that if tuition were delayed until after graduation.

Many graduates who make more money don't like income-based repayment plans because they end up paying more for their education. On the flip side, those who end up making very little may not like the plan either: $1,200 a year for someone rasing a family on only $40,000 may be far more important than $3,000 a year for someone with a six-figure income.

If people who would eventually be earning a higher income opt out of the system by chosing to go to another school, then low-income earners who take the delayed tuition deal could end up paying a higher percentage of their income to keep the system afloat.

Regardless of the supporters and detractor's arguments, however, the idea is likely to stick around at least for a while.

“I feel as if the problem of student debt has reached a tipping point," Democratic Oregon state Rep. Michael Dembrow told the Washington Post. "It’s on legislators’ minds. And I think it’s on legislators’ minds because it’s on their constituents’ minds. This is something we’re hearing a lot about — at the doorstep, through our polling, through our e-mail.”

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David Self Newlin

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