WASHINGTON – Today, Oregon’s Senator Jeff Merkley introduced legislation that would create a new model for college financing to help middle class families pay for college. Merkley’s plan is based on and complements Oregon’s legislation that was passed during the 2013 legislative session and arose from a Portland State University student-led project.
The bill would fund state pilot programs that replace federal loans with a reduction or elimination of college costs in exchange for the student’s commitment to pay a small percentage of their future income.
“Our economy depends on a strong and growing middle class, and more than ever the road to middle class success runs through college,” said Merkley. “With students starting their working lives burdened by tens of thousands of dollars in debt, it’s clear the old models aren’t working anymore. We need bold new initiatives that put opportunity for middle class Oregonians at the heart of our economy.”
The “Pay It Forward” Guaranteed College Affordability Act of 2013 would allow some or all of students’ upfront costs for a two- or four-year college to be covered by program funds. Then upon graduation, students contribute a percentage of adjusted gross income (AGI) for a fixed number of years back into the fund. Put simply, students would draw from program funds while they are in school, and pay into—or pay it forward—when they graduate.
- The bill would establish an alternative to undergraduate federal Direct Loans, providing Federal funding to states that agree to pilot a Pay It Forward model up to the current Stafford loan limits for each student that participates.
- States would select schools to participate in the pilot. Students who attend those schools could choose to enroll in the program.
- Rather than forcing students to take on expensive debt obligations with fluctuating interest rates adding an uncertain ability to repay, this legislation would open up a new model to guarantee students’ ability to afford college repayment based on their income after graduation.
The rising costs of college and lack of assistance have caused students to graduate with enormous debt loads, or in too many cases to drop out because they can’t afford school. In Oregon, students taking out loans for their education face an average debt of $24, 370.