College students’ heads hung low last Monday after Congress allowed the interest rate on government-subsidized student loans to double from 3.4 to 6.8 percent. With the average student loan debt already ringing in at a startling $35,200, can you blame today’s 20-somethings, nervous they will never dig themselves out of debt? There is a solution, however: move to Oregon.
The Oregon Legislature approved a plan that would offer up free tuition at public universities in exchange for three percent of graduates’ earnings for the first 25 years of life post-commencement, according to the Associated Press. The added bonus: individuals seeing meager earnings pay less than the high money-making moguls.
Legislature is encouraging students to “Pay It Forward,” naming the statewide student loan program just that. Meaning, students raking in $600,000 over 20 years would pay just $18,000 for their degree, while a millionaire would be opening up his or her wallet wide enough to subsidize the leftover.
TechCrunch likens Oregon’s move to a venture capital portfolio, claiming just how the portfolio “earns its profit from a few star investments, many students would end up underpaying the cost of their college, subsidized by the school’s star businessmen.”
The site also took a jab at PayPal Co-Founder Peter Thiel whose Fellowship recently attracted the attention of five local students, luring them off to the West Coast. Through the program, 20 entrepreneurially-minded college students are paid $100,000 to drop out of school and invest the money in launching their own startup instead.
Stanford’s Dean of Engineering Jim Plummer has already argued the problem with Thiel’s program, however, pointing out that when early-stage investments fail—like most do, he emphasizes—students will be left without “marketable skills or a network of support.”
So, why not latch on to Oregon’s approach? The state is still betting on its smartest students, but giving everyone the chance at obtaining a still-very-valuable college degree. Those successful students expected to reel in the dough just can’t be tempted by the Thiels of the world, hoping they will drop out to boost business.
The model has been working in Australia, and is being considered by legislators in Washington, Vermont, New York, Pennsylvania and Wisconsin, according to the AP.
“This is not a loan,” said Executive Director of the Economic Opportunity Institute John Burbank to the AP. “You’re paying forward, essentially, so your contributions would enable to next generational cohort of students the same free access.”
And who doesn’t like the sounds of that?
Featured Photo Courtesy of AP/Greg Wahl-Stephen