Pay It Forward pilot program recommended to 2015 Oregon Legislature

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Photo illustration by Adam Grace

The Pay It Forward program was concieved as an alternative method to paying for college tuition. On Sept. 11, The Oregon Higher Education Coordinating Commission unanimously voted to recommend a Pay It Forward pilot program to the 2015 Oregon Legislature.

The program proposes an alternative to the rising cost of in-state tuition for students of Oregon’s universities and community colleges.

Rather than paying tuition in full each year, students would forego all or some of their tuition costs in return for the payment of approximately two to four percent of their income for the next 20 years after graduation, depending on whether they attend a community college or university.

From course to courts

The Pay It Forward program was introduced to Portland State through the capstone course Student Debt: Economics, Policy and Advocacy, led by professors Barbara Dudley and Mary C. King. The capstone focused on finding solutions to debt accumulated through higher education.

“We spent the first half of the capstone talking about different legislations and ideas we had about alleviating student debt. Our community partner the Working Families Party brought us the Pay It Forward proposal from the Economic Opportunity Institute up in Seattle,” said Kevin Rackham, a student who enrolled in the course as a sophomore.

With the help of EOI’s Executive Director John Burbank, the Oregon Center for Public Policy’s Jason Gettel and others, students in the capstone class adapted Pay It Forward to fit Oregon’s education system.

In December 2012, students presented Pay It Forward as a legislative concept to members of Oregon Legislature. The goal of the presentation was to find cosponsors for the bill.

“[Oregon State Senator] Michael Dembrow and I put together a draft of a bill that mirrored what ideas the students had come up with,” Dudley said.

In spring of 2013, Oregon Legislature passed the program as House Bill 3472.

As requested by the bill, the Oregon HECC designed a pilot for Pay It Forward in early September with help from a workgroup.

“The workgroup was mostly a lot of discussion about different aspects of the program and trying to figure out how to make it most accessible to students,” Rackham said.

Rackham, along with several other students from the capstone, joined with economists, educators and others to form the workgroup which brought the Pay It Forward pilot to life.

“If things go very quickly and smoothly in Legislature, the pilot could get going in 2015. More likely, it will start in 2016,” Dudley said.

On Sept. 11, the HECC found the pilot program proposed by the workgroup to be a worthy initiative for the Legislature to undertake.

Weighing the Costs

While praising Pay It Forward for several aspects, such as the income-based payments friendly to students, the HECC acknowledged other education funding aspects that hold priority, including the expansion of the Oregon Opportunity Grant.

The Portland-based independent economic consulting firm ECONorthwest was asked by the HECC to look over the proposed Pay It Forward model to ensure its mathematical accuracy. The review found that the approach is feasible, though significant losses are predicted.

The study found that, “with the assumptions in the model as delivered, the net present value of losses associated with the four-year pilot program over its first 50 years exceed $95 million and the losses associated with the community college program add another $24 million to that, for a total of over $119 million for a program that can only serve 1,000 new students each year.”

According to a recent press release from the HECC, the pilot would allow 1,000 voluntary students to try the new tuition-free concept. It’s anticipated that the number would annually increase until it reaches 4,000.
“We expect the pilot to be in high demand,” said Dudley, expressing hope that the number of participants will one day go well beyond 4,000.

Volunteering to be selected for Pay It Forward will be as easy as checking a box on a financial aid form, Dudley said. Participation is open to students regardless of need.

“Opposition tends to come from two directions. One is more ‘where are we going to get the upfront funding for this?’ I say to view it as an investment. The other line of opposition comes from the left, who believes [Pay it Forward] should be publicly funded,” Dudley said.

Associated Students of PSU Student Body President Eric Noll discussed some of his reservations about the program. “I don’t believe [Pay It Forward] will be the ultimate solution; I believe it may be better than what we have now,” Noll said.

If universities were to receive their funding from a small percentage of their graduates’ incomes, more focus would be placed on higher-earning degrees in the sciences than degrees involving nonprofit and social work, Noll said.

“Every funding model we look at has its benefits and drawbacks. Unfortunately, we’re working in a zero-sum game of funding from the state,” Noll said. “Pay It Forward has benefits when it comes to moving higher education from that zero-sum game, to some degree. However, there is still an operating cost. That is still money students have to pay back over the long term.”

Noll noted that incremental approaches to paying the state back are not going to be enough.

“When Pay It Forward was thought of in the first place, it was a really creative and innovative idea. It shouldn’t die. We should continue to pursue really creative and innovative ideas with a level of impatience to the issue. We can’t wait any longer,” Noll said.

Oregon ranks 47th in state spending per college student, giving students over $2,000 less than other states, according to the 2014 State Higher Education Finance report.

“The amount of money we’re asking for to fund Pay it Forward is kind of a drop in the bucket,” Rackham said.

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