Read the original story here in Salon.
With Congress inert, one state has stepped forward with an idea. The same day federal student loans doubled last week, Oregon’s legislature unanimously passed HB3472, or the “Pay it Forward” debt-free higher education plan. Once the bill is fully implemented—a process that will require votes from the legislature and the public over several years—Oregon high school graduates will be able to attend public colleges or universities in the state for free, and have a small percentage of their future income taken into a fund to pay for the next generation. It’s almost an inverse of Social Security: Instead of paying to ensure a measure of dignity in retirement at the end of life, Oregonians will pay to ensure an investment in student learning at the beginning.
The bill’s passage did not result from a multi-year coordinated effort hammered out by elite policymakers. Incredibly, it started just this past fall, with a college senior project at Portland State University. The 6-credit “capstone” course was called “Student Debt: Economics, Policy and Advocacy,” and it sought to combine deep research of the history of student debt with the real-world experience of actively seeking potential remedies. “We wanted to propose a solution to begin to resolve the issue on the state level,” said Ariel Gruver, one of the 15 students.
The instructors for the course were Mary King, an economics professor, and Barbara Dudley, a longtime political activist and co-founder of the Oregon Working Families Party. Created in 2006, the Oregon WFP nominates candidates for the state legislature that sign on to its policy agenda, which focuses on issues of economic justice. (Instead of a separate ballot line like the party uses in New York, the Oregonian party cross-nominates candidates so their party affiliation reads “Democrat, Working Families Party.”) The party has emerged as an important political force in the state. Of the 90 members of the Oregon House and Senate, 35 are cross-nominees of the WFP, including two Republicans. “We have become a valuable name to have on the ballot for Democrats and Republicans,” Dudley said. “On our issues, the parties don’t just line up like a football team.”
While students analyzed the student debt crisis, Dudley cast around for possible solutions. The process brought her to the Pay It Forward plan, the brainchild of John Burbank of the Economic Opportunity Institute (a Seattle-based liberal policy shop). Under Burbank’s plan, students would matriculate at public colleges and universities for free, and pay 3 percent of their future earnings for around 20 years into a fund to pay for successive students. Community college students would only have to pay 1.5 percent. The payments would come out as a pre-tax payroll deduction, and the more money graduates make over time, the more they would pay.
This creates an incentive to choose a career based on personal fulfillment, rather than one that earns lots of money to pay down student debt. Income-based repayment exists at the federal level, but it’s a higher percentage of income (capped at 10 percent of discretionary income) and it merely pays off individual student loan debt. It does not have Pay It Forward’s element of universality, where everyone pays into the program and attends college tuition-free.
But start-up money would be needed at the outset to jumpstart the policy. As luck would have it, Oregon Treasurer Ted Wheeler was concurrently pushing a proposal called the Oregon Opportunity Initiative. This would employ bonds to provide grants for low-income college students, using the financial instrument to allow for government investment in human infrastructure in addition to physical infrastructure. With that in place, the Treasurer could also float bonds to kickstart the Pay It Forward program, and eventually pay off the bonds as more and more students enter the system.
Dudley presented the Pay It Forward plan to her students, and they loved it. “It has great potential, especially when we’re facing such rising inequality,” Ariel Gruver said. “I know many people who want to go to school, but taking out loans is just not a viable option.”
The class enlisted the Oregon Center for Public Policy to help run the numbers, and brought in several speakers from the governor’s office and the state legislature to hear about the plan. One of them was Rep. Michael Dembrow, the chair of the House Higher Education Committee. He and his colleagues were increasingly aware of the explosion of student debt—“we were hearing it on the doorstep, in town halls,” he told AlterNet—and he wanted to advance legislation to creatively attack the problem. Dembrow proposed that at the end of the quarter the students present their findings and recommendations to a panel of legislators. This presentation became the final exam for the course.
After that, things moved swiftly. The Working Families Party put Pay It Forward at the top of their legislative agenda and began to buttonhole legislators of both parties. Dembrow held hearings on the plan and picked up a bipartisan group of sponsors. “At the first hearing,” says Dembrow, “when the guy from the Economic Opportunity Institute [John Burbank] said the plan derived from the work of Milton Friedman, suddenly the Republicans became more interested.”
After the class ended, the students became activists. They convinced Treasurer Ted Wheeler that his bonding proposal could be used to generate startup costs for Pay It Forward. Then students went to Salem to lobby the legislature. “It was almost surreal, from a student report, to go into lobbying,” said Tracy Gibbs, a class member. “In the first few meetings I just took a lot of notes, but I gained more confidence and it was really fun.”
Other students gave public presentations in their communities to build popular support. Ariel Gruver held one at Portland State with U.S. Senator Jeff Merkley. Speaking about the Pay It Forward plan, Merkley told AlterNet, “This bill is a terrific Oregon-born innovation. We must explore creative ways to make it affordable and realistic for all Americans to attend college.”
Dembrow believes the student advocacy was critical to the bill’s success. “That’s always the best form of advocacy, bringing it to a human level,” he said. “And it was very effective in this case.”
In the end, the bill passed unanimously out of the House and Senate, just nine months after the capstone course began. Governor John Kitzhaber plans to sign it. “I’m an inveterate optimist, so I thought it could pass but I thought it would take a few years,” Dudley remarked. “The stars really aligned on this bill.”
But there’s still a long way to go. The bill instructs the state’s Higher Education Coordinating Commission to create a pilot program, which could begin at one state community college and one four-year school. Before it can go into effect the legislature must approve the HECC’s proposed pilot in 2015. Meanwhile, Treasurer Wheeler’s plan to issue bonds for human infrastructure, the key initial funding source for the bill, requires a constitutional amendment. That amendment passed the legislature this year, but will need to go before voters in November 2014 for final passage. Supporters are looking forward to the public debate, emphasizing the attractive opportunity of free higher education as a societal good and an economic engine. Dudley even envisions the bonds as “something you sell in the grocery store, like war bonds, something to help the community.”
Dudley cautioned that the Pay It Forward plan isn’t a silver bullet to solve the higher education crisis. Current debtors get no relief from the plan and there’s a concern that making state colleges and universities free to students will merely make the tuition charged to the Pay It Forward fund less visible. Instead of the state funding higher education as a public good, the fund—paid by graduates alone rather than the public at large—might bear the burden. ‘
“We consider this part of our ongoing work,” Dudley said. “The legislature still has to fund higher education.” Even with a larger higher education budget this year, tuition at Oregon’s public universities is set to rise another 5 percent (the smallest increase in six years).
Pay It Forward allows every Oregon student, regardless of socioeconomic status, to acquire free education at the point of delivery. They will contribute, over time and at an affordable level based on their personal success, to ensure that others have the same opportunity. In that sense it’s internally redistributive: High achievers end up helping those who graduate into lower-paying work. If the policy expands beyond Oregon’s borders, students across America could have a debt-free opportunity at public colleges. That could force private schools to compete on costs, thus lowering skyrocketing annual tuition rates.
Everyone involved with the success of Pay It Forward marveled at the speed with which it moved from a student project to legislative passage. Barbara Dudley has already fielded requests from lawmakers in other states to learn more about the program. The students plan to keep their lobbying efforts up to ensure the pilot program accords with their vision.
“It’s still a bit surprising to see how much we’ve accomplished,” student activist Ariel Gruver said. “Recognizing that this started as a class is kind of inspiring in itself. We do have the opportunity to try and make this work.”