Read the original article in The Oregonian here.
National media wrote breathless news articles last week suggesting that, as The Wall Street Journal put it, "Oregon's Legislature is moving ahead with a plan to enable students to attend state schools with no money down" by pledging to repay a small percentage of their earnings for years after they graduate.
But that's a wild exaggeration. In reality, the Legislature voted to have a commission study the idea and, if it makes any sense, propose a trial program to the 2015 Legislature.
Financial aid experts say they doubt Oregon will end up adopting any form of the free-now, pay-later approach, citing the many ways that could go wrong.
Still, given crushing levels of debt that some students face, the concept has plenty of appeal. It seems obvious more students would go to college if they didn't have to pay tuition or worry they'd be saddled with oppressive loan payments unless they find a high-paying job afterward.
The bill asking Oregon's Higher Education Coordinating Commission to study the approach and, if feasible, propose a pilot version to the next Legislature recently won unanimous approval in the House and Senate. It didn't hurt that its main champions were earnest Portland State University students who pushed a "Pay It Forward" idea as part of a class on student debt.
"It was timely, given all the concern about student debt," said Nathan Hunt, a PSU political science major who was among those who lobbied for it. "Having it come up for a vote in the Senate the same week that student loan interest rates doubled couldn't have been better timing."
The idea's kill-student-loans appeal struck a chord, prompting stories by The New York Times, The Associated Press and news outlets as far away as Australia, most of which made it sound like a done deal.
The devil is in the details, however, and even proponents acknowledge that they haven't worked out most of them.
The only analysis given to lawmakers, a broad-brush look put together by Jason Gettel at the left-leaning Oregon Center for Public Policy, suggests students who attend four-year universities could have tuition and fees waived as long as they agree to pay back 3 percent of their income over 24 years.
The higher education commission might come up with very different numbers and parameters after it delves deeper, Gettel said.
Such a plan has legions of problems, however, said Mark Kantrowitz, a widely cited financial aid expert and senior vice president of the Edvisors.com group of financial aid websites. That helps explain why the approach, though studied many times, isn't being used anywhere in the United States.
Among the catches he cited:
Many students would still end up owing big loans -- plus the promised percentage of their income. Only tuition and fees would be free, and many students need loans to cover the other costs of college. According to Di Saunders, communications director for Oregon's university system, the typical four-year cost for an in-state undergraduate is about $87,000 -- $31,000 for tuition and fees and $56,000 for rent, food and other expenses.
"You'll end up with the hit to the income and you still have student loans," he said. "It's not really going to solve anything."
Twenty-four years is a long time to burden a student with college costs, even if payments are only about $2,000 a year during the final 12 years of the contract.
Asking students to pay 3 percent of their income, even for that long, would be unlikely to cover the state's costs to operate universities for free. Students would likely be asked to pay a higher percentage or the system would go broke, Kantrowitz said.
Collecting money from former students who move out of state or out of the country would be tricky at best. Oregon doesn't have the power to compel other states or the Internal Revenue Service to tell it how much individuals outside Oregon earn. And other states would probably try to regulate the repayments as loans, which could run afoul of usury laws.
Saunders said she sees another, bigger challenge: To keep universities operating, Oregon would have to come up with a lot of money to replace the lost tuition and fees until enough graduates have started making repayments -- perhaps for as long as 10 years.
"The state would have to pay a lot more in general fund support until the pool is built up," she said. Given that Oregon struggles to pay 30 percent of the cost now, relying on students to pay 70 percent, "that might be too heavy a lift."
Still, Saunders saluted the students for pushing the proposal and lawmakers for supporting it. Asking the higher education commission to take a deep dive into the idea might spur some fresh solutions, she said.
"This is a creative idea we should be taking a look at," she said. "But there are a lot of operational and logistical things that need to be thought about. It's going to take a lot to figure out if it's viable in our state."
Bills calling for further study of an issue are common in Oregon. One clue that a bill is going to spur thinking -- but no action -- is the pricetag legislative analysts attach to it. For the Pay It Forward bill, the anticipated costs to the state are zero.
"This is a study bill," Saunders said. "It will spark some important discussion, to see if even a pilot is something we would be able to do. Some of the media were writing about it like we were doing this tomorrow."