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It's too bad members of Congress weren't required to take Student Debt Economics, Policy and Advocacy at Portland State University. If they had taken the class, perhaps Democrats and Republicans could have found enough common ground to keep student loan rates from doubling.
Legislators still might cast aside their differences and avoid the increases before school starts, even though the technical deadline for legislation to keep rates at 3.4 percent has passed. But students at Portland State have initiated a much more productive discussion.
Thanks in part to a project that originated in the student debt class, the Legislature last week passed House Bill 3472. The bill directs the Higher Education Coordinating Commission to explore a "Pay Forward, Pay Back" pilot program that would delay tuition payments until after students graduate and tie the cost to earnings.The plan, designed by John Burbank of theEconomic Opportunity Institute in Seattle, has been compared with theAustralian Higher Education Contribution Scheme. But Burbank said it is different in important ways. The Australian program still relies on loans, with expectations that students pay back certain amounts. "Pay Forward, Pay Back" is not a loan program; it's a pledge to pay back a percentage of earnings.
Since the plan is untested, Oregon will have to consider some difficult questions. A key one is whether to cap the payments that a former student would be required to pay. Burbank, the PSU students and the Oregon Working Families Party, which helped lobby for the bill, envision graduates of four-year schools paying about 3 percent of their income for about 24 years. Some graduates would pay less than they would with traditional loans. Some would pay more. A handful who create successful companies or enter lucrative careers could pay a lot more.
That potential reveals both a strength and a weakness of the plan. To many, the idea that those who earn more should pay more is appealing, particularly in progressive Oregon. But if enough ambitious students choose traditional payment options, the financial model of the new plan weakens.
Tracy Gibbs, who was part of the PSU class, said students debated that point. She acknowledged that some students likely would choose not to participate without a cap. But "the majority felt the cap would ruin the spirit," she said.
A pilot program is a good way to gauge which side of that debate was right. The Higher Education Coordinating Commission also will have to work out operational details, such as how to collect payments and track students as they move. And there's the biggest detail of all: how to fund the upfront costs of the program.
Creating this program likely will be a slow process, and it probably won't be the college-finance solution for everyone. But it's worth a try. U.S. student loan debt is approaching $1 trillion, an expense that creates a drag on the economy by reducing young adults' ability to buy homes and make other purchases. At the least, Oregon is trying to find a solution instead of playing political games with student debt.
When asked what she learned from the PSU class and her experience helping push an idea through the Legislature, Gibbs said: "I learned about talking to people who are of a different ideological viewpoint than me ... how to negotiate with them."
Yep, Congress should have taken the class.