Free College Now, Pay for It Later?

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It’s not a loan or a scholarship — this is something new.

Both houses of the Oregon Legislature unanimously passed a plan that could eventually allow students to attend state colleges without paying for classes. “Instead, they would commit a small percentage of their future incomes to repaying the state; those who earn very little would pay very little,” The New York Times says.

Supporters say the model has been used successfully in Australia and is a “pay it forward” approach: Former students would be paying to help current ones attend. Experts told the Times they know of no university in the U.S. using it, but a group of Portland State University students latched onto the idea last fall and pitched it to legislators as a class project.

The Working Families Party of Oregon prioritized the proposal, and both Democrats and Republicans backed it. “House Bill 3472 — now on Gov. John Kitzhaber’s desk — directs the Higher Education Coordinating Commission to study the model of funding, and, if it has merit, to design a pilot project for the 2015 Legislature to consider,” The Register-Guard says.

“What we were really trying to get at is [to] eliminate the role that banks are playing in charging interest and fees to students,” party director Steve Hughes told the paper. Students would contract to pay 3 percent of their annual income after graduation into a higher education fund for 24 years.

Oregon grads with federal loans leave school with an average of $24,616 in debt, The Register-Guard says. That number may rise considerably now that interest rates on new subsidized federal loans have doubled. As proposed, the plan would have graduates who make $30,000 a year putting $900 of that into the state fund, without ever getting into student loan debt.

What do you think of the proposal? If this were an option for you or your kids, would you take it? Share your thoughts on our Facebook page.

This article was originally published on MoneyTalksNews.com as 'Free College Now, Pay for It Later?'.

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