In response to the July 1 doubling of student loan interest rate, the state of Oregon has proposed a new way to fund college students ever increasing tuition bills. The Oregon Legislature proposed a new method that would allow college students to borrow tuition money with no money down and a fluctuating payment pattern. The new program called the “Pay it Forward, Pay it Back” fund is hoping to be established so that Oregon students can draw from it to pay their tuition and then eventually pay back into it.
The fund is calling for $9 billion in seed money that they are hoping to borrow with the idea that after time the fund itself will become self sustainable. How the fund would work is that students who had their tuition paid forward, would then pay back annually into a special fund 3 percent of their yearly salaries for a period of 24 years. This allows each borrow to pay the find back in a manner that reflect their current economic state. It’s a new way to bypass the previously established lenders and the now doubled interest charges.
The Oregon Senate unanimously passed a bill on July 1, the same day that Washington let the current student loan interest rate double to 6.8 percent, to create a committee that is charged with developing a pilot program for this fund. The house immediately followed approving and in 2015 the decision whether or not to implement the fund will be made.
This proposal originated in Oregon as a product of discussions had by the Economic Opportunity Institute, which is a nonprofit nonpartisan group. The fund closely parallels Australia and the United Kingdom’s income based repayment programs that have been instituted and running successfully internationally for about a decade. With the American student load debt quickly surpassing $1 trillion, other state such as Washington, New York, California, Pennsylvania and Vermont are following behind Oregon and expressing interest in similar proposals.