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Today the Consumer Financial Protection Bureau announced that federal student loan debt now tops a trillion dollars.
Many people across the country are trying to figure out a solution to that problem. One proposal from Oregon has been attracting a lot of attention.
It’s called “Pay It Forward,” and it would allow students to learn now and pay later based on a percentage of their future income.
The idea grew out of a seminar class at Portland State University.
“It would work like social security in reverse,” one of the seminar students, Tracy Gibbs, told Here & Now. “You would get the benefit of your education now and pay 3 percent of your gross adjusted income once you graduate, for a number of years.”
Michael Dembrow is a state representative for Oregon, and also chair of the higher education committee.
He’s also an English professor at Portland Community College. He helped to shepherd the legislation though the state legislature.
“We’ve really seen the issue of student debt come to a tipping point,” he said.
He expects Oregon to have a pilot program in place by 2015.
JEREMY HOBSON, HOST:
It's HERE AND NOW.
The Consumer Financial Protection Bureau announced today - something that many already thought - that federal student loan debt now tops $1 trillion. There are a lot of people from all across the country trying to figure out a solution to that problem. And a proposal from Oregon has been attracting a lot of attention. It's called Pay It Forward, and it would allow students to learn now and pay later based on a percentage of their future income. It was an idea that grew out of a seminar class at Portland State University.
Tracy Gibbs was part of that class. She joins us now. Also with us, Michael Dembrow, an Oregon state representative who helped shepherd this legislation through the state legislature. And Tracy, let's start with you. I guess this was your idea?
TRACY GIBBS: Well, it wasn't all my idea. What we did with the class is that we researched all about student debt, the history behind it, the context of what it is today, as well as some current legislation and some ideas going around. And we saw the idea from the Economic Opportunity Institute, and we decided to really grab on to that idea. And we had the Oregon Center for Public Policy run the numbers for Oregon to see what this idea for tuition-free Oregon and how it would work.
HOBSON: And how would it work?
GIBBS: It would be like Social Security in reverse, where you would get the benefits of your education right now, and you would pay for the education later, you know, as soon as you graduate. And it'd be 3 percent of your adjusted gross income for a four-year university and then 1.5 percent if you took a two years Associates Degree.
HOBSON: It would be no money down?
GIBBS: It would be no money down for a tuition, yes.
HOBSON: And why do you think that that's a better idea than the current system?
GIBBS: I think it's a better idea than the current system right now because there are so many students going into debt over this. They are taking way too much and there's not enough graduating because of taking this debt. So many students have had to drop out because of costs of college, and that's just a shame. I think a stable and democratic society depends on educated members of the community and educated citizens. And if they can't afford to have that opportunity like - just like everybody else, then I mean I just don't know what we should do.
HOBSON: So you take this idea and you bring it to Michael Dembrow. And Michael, where did you take it from there and why did it catch your eye?
STATE REPRESENTATIVE MICHAEL DEMBROW: I chair the House Committee on Higher Ed, and we've been hearing about this for a number of years. And of course for myself as a teacher, I've seen it first hand. But I think this year this issue has reached a kind of tipping point. And we were hearing at the doorstep during the election, we were hearing from our polling that the problem of student debt and students being priced out of higher education was becoming one of the most serious concerns of Oregonians. So when I was invited in, I was very excited to hear that the students were researching this. And I told them that once they had settled on a proposal, that I'd put together a panel of legislatures, and they could pitch the idea to us. That's what happened, and that's what led to the legislation being drafted and coming before the higher ed committee.
HOBSON: Why did you think, when you heard about this idea, that this would be a good solution to the problem that you saw existed?
DEMBROW: Well, it was a creative proposal, and it was one that has been in place for a number of years in Australia, with a lot of success there from what I was hearing. You know, I felt that it was something worth pursuing, not committing to completely upfront but at least putting a study in place and a pilot project in place. And that was the route that we decided to go.
HOBSON: What about the idea that this is just a Band-Aid on a bigger problem and that is the fact that the cost of education just keeps on increasing?
DEMBROW: If you look at the - at least in the public sector, the reason for the rise in tuition is not really that the costs are going up, but it's that the states are putting less and less into higher ed because their budgets are constrained, and higher ed unfortunately tends to be at the back of the line. So this is a way - not to excuse the state from its commitment. I mean the state still will need to invest in buildings. It will still need to carry its share. But this will be a way for it to help out the student with the student's share of the costs of higher education.
HOBSON: Let me play you something that Sara Goldrick-Rab, who's a professor of Educational Policy Studies and Sociology at the University of Wisconsin-Madison, said recently on ON POINT WITH TOM ASHBROOK. She said that this program undermines federal efforts to provide student aid that actually functions and puts the burden on students. Here she is.
(SOUNDBITE OF INTERVIEW)
SARA GOLDRICK-RAB: Essentially, it charges students with the task of paying for future students. It asks the state to be nice and continue to contribute, but it does nothing to ensure that that will happen.
HOBSON: Michael, how do you respond to that?
DEMBROW: I don't see this being an either-or. I see this as being very complementary to what we're doing now, except that it is relieving the student of those upfront costs.
HOBSON: Tracy, what about you?
GIBBS: It is relieving the student from the upfront cost, and I think also this is still like just a pilot program and that there is going to - we're going to be asking a lot from the state in initial bonding. It's going to be a long time before this is, you know, a feasible program that can financially invest on its own. And it's important to remember that it is just covering tuition and that there are still cost-of-living expenses that need to be covered that the federal and state programs can help with it as well.
HOBSON: So what's the reaction been so far to this? I'm sure you've got a lot of people who are very excited about this idea in Oregon. And where do we go from here? I'll start with you, Tracy.
GIBBS: The reactions to this, I think, have been both really positive, and there have been some questions about it. And I think that that's great that there's questions about it, because that means that the student debt, people are talking about it and people are taking this issue seriously. And I think with Pay It Forward and other pieces of federal and state support that we can address this issue and that we can take the one trillion down to a reasonable number.
HOBSON: And, Michael?
DEMBROW: Clearly, the state is not going to write a blank check on a program, and that's why it's going to be studied. It's going to be piloted. And we'll try to get the answers to those questions just as quickly as we can. But it's just really exciting that we are addressing this problem seriously. The bill that puts Pay It Forward into place was unanimously approved by both chambers of the Oregon legislature, that tells you just how serious an issue this is for legislators and for the general public.
HOBSON: Michael Dembrow represents District 45 in the state of Oregon and Tracy Gibbs is a recent graduate of Portland State University. They both have been involved with this new idea to help people pay for college. Thanks to both of you.
GIBBS: Thank you.
DEMBROW: Thank you.
HOBSON: And coming up, when you are watching TV, is your TV watching you? That's next. HERE AND NOW. Transcript provided by NPR, Copyright NPR.