As federal student loan interest rates doubled from 3.4 to 6.8 percent at the beginning of July, a bill called Pay it Forward was approved by Oregon’s state legislature.
The bill directs the Higher Education Coordination Commission to investigate a model for public universities not to charge tuition.
Instead, students would owe the university system about three percent of their income for around 25 years.
William Lastrapes, an economics professor at the University of Georgia, said “the alternative is for students to borrow.” He said the program was the state’s effort “to buy stock in students.”
The Oregon legislature will consider the issue in 2015.
It estimates the start-up period could cost the state roughly $9 billion.
Pay it Forward is inspired by a similar system that has worked in Australia. It was proposed by Rep. Michael Dembrow (D-Portland), who said “the problem of student debt has reached a tipping point,” according to a Huffington Post article.
“It’s on legislators’ minds. It’s a way to share risk in such a way as to provide incentives for the university to provide marketable skills,” Lastrapes said.
Lastrapes also said the program could lead to faculty members being paid by the metric of future student salary and compared the program to a warranty.
“The University is [providing a] warranty that you’re going to get a good job, and the way they signal that is to say ‘Don’t pay us much if you don’t get a high paying job,’” he said. “I like these innovative ways to provide financing for higher education.”
Despite the program’s initial appeal, not all commentators back the measure.
Writing for The Century Foundation, Sara Goldrick-Rab argues tuition is only 40 percent of the expense of a college education.
Eliminating government access to loans would still leave Oregon students owing $14,000 a year — without government-secured debt, students could be forced to take on private debt or eschew a college education altogether.
At The Atlantic, Jordan Weissmann worries Pay it Forward could be especially harmful to those in high-paying majors such as engineering or computer science.
But reactions among Georgia students remains enthusiastic.
Patrick Wylie, a graduating senior from Alpharetta majoring in economics and history, spoke on the idea.
“I would welcome the chance to use my own skill to pay back my debt rather than relying on my family,” Wylie said. “This is a brilliant idea that doesn’t demean the student.”
Other UGA affiliates, including alumnus Brett Blalock, are less optimistic.
“[Either way],” he said, “you’re still paying for it.”