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On July 1, the Oregon legislature passed HB 3472, aka "Pay It Forward, Pay It Back." The bill proposes that students be allowed to attend state schools without paying upfront. Instead, they'd promise to pay 3% of their annual salaries for 24 years.

Headlines trumpeted "free" tuition and "free higher education." A few things to keep in mind:

First, this is by no means a done deal. Even if Gov. John Kitzhaber signs the bill, that merely signals the state's Higher Education Coordinating Commission to create a pilot program by 2015.

Second: Tuition represents only about 40% of the total cost of a college degree.

Third: One expert predicts that need-based grants will likely disappear under such a system. Without grants, poorer students may wind up borrowing more than they do now to cover other costs.

Fourth, and most important: This is not a "free" education. The students have to pay the money back -- and some will pay considerably more than others. 

In theory, Pay It Forward sounds better than the current system, which requires immediate loan payments even if students can't find jobs. Proponents say the new plan will let young adults build lives and participate in the economy, versus moving in with their parents and spending much of their salaries on debt service.

Critics want to know where the initial funds (a projected $9 billion) will come from, and exactly how the payback could be enforced. Some say that the plan doesn't address the underlying problem of bloated education costs -- it just changes the time frame for paying them.

Others naysayers believe the plan would drive medical and law students away from public institutions due to the disproportionate nature of the payback. For example, if during that 24-year period one student earned $800,000 and another $2 million, the first would repay $24,000 and the second $80,000.

Economic and civic benefits

Some education experts have issues with Pay It Forward. In a 2012 paper, the American Federation of Teachers stated that postsecondary ed is everyone's business. Just as we pay for fire protection even if our own homes never burn, it's in our best interests as a society to have a well-educated population.

According to the AFT, income-based repayment plans are part of the tendency to see higher education as "a private transaction that accrues benefits to the individual rather than a public good that brings economic and civic benefits to communities."

Sara Goldrick-Rab, a professor of higher education policy at the University of Wisconsin at Madison, questions how Pay It Forward could be funded and how those 3% payments would be enforced. In fact, she says, students might choose to leave school "with skills but before graduation" in order to avoid paying at all.

In her post on the Education Optimists blog, Goldrick-Rab suggests that that costs are high because colleges cater to those who desire "an elite experience" and because state governments have decreased funding and done little to keep costs down at public schools.

"Todaythe costs of attendance borne by students and their families have never been higher," she says, and that situation has been exacerbated by the recession and a weak job market.

A way around loans?

A dozen institutions of higher learning do waive tuition or allow students to work it off,  according to the FinAid website.But even at these schools students usually have to pay for dorms, meal plans, books and the various fees that keep universities running (and parents griping).

In some cases loans can be erased. The Teacher Loan Forgiveness Program allows for up to $17,500 to be forgiven for teachers in low-income communities. The Public Service Loan Forgiveness Program makes those who work in a number of public service jobs eligible for forgiveness once they've made 120 payments.

AmeriCorps offers awards and loan forbearance to recent grads. The Teach for America program offers the same benefits.

Such opportunities are available to relatively few students, however. For the majority, it's clear that the current system isn't working. The average debt load has gone up 30% in the past five years and delinquencies rose 22% in the same period. Nearly half of all outstanding loans are currently in deferment.

Programs like Pay It Forward address only those symptoms rather than the underlying disease.

Harder to get through

It's tempting to say, "Just go to a cheaper school" or "Work your way through, the way I did." That's not as easy as it sounds, especially since costs have risen exponentially and degrees are taking longer to get.

Associate's degrees take an average of 3.8 to 5 years to complete and bachelor's degrees from 4.7 to 5.6 years, according to a report from Complete College America. Reasons vary: family responsibilities, the need to work, a lack of direction and a lack of academic support. But even the most focused and motivated people on the planet may not catch the right breaks. 

I got my university degree in midlife without paying a dime out of pocket. Scholarships, grants and work-study covered tuition, fees and books. I already had my own apartment, paid for by a couple of part-time jobs, and deeply entrenched frugal habits let me stretch available dollars (especially since I was paying down divorce-related debt at the time).

Sure, I hustled to get those funds and those jobs. Yet personal drive isn't always enough. Another older student I knew earned a couple of scholarships but she barely made it through  despite a full-time job and shared housing. Her grant was delayed during one quarter, so she couldn't buy textbooks.

For a few weeks she spent any free hours waiting for a chance to read the reserved texts at the library. She managed to get through where a lot of others might have given up -- or just taken out more loans.

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