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Pay It Forward Plan Draws Serious Criticism

July 21, 2014

by Suada Kolovic

When it comes to paying for a college education, it seems as though students have two options: deal with impossibly high payments while they're in school or crippling debt for years afterwards. Well, Oregon students were provided a third option last year when legislators approved the Pay it Forward plan that would allow students to attend state colleges without paying tuition or taking out student loans but would instead commit a small percentage of their future incomes to repaying the state. It turns out, however, that said plan isn't the saving grace for college students afterall.

First proposed by students at Portland State University, Pay It Forward has drawn serious criticism since Oregon passed a law to study the idea. According to a report by the American Association of State Colleges and Universities, analysis shows that the plan would leave most graduates deeper in debt than if they had taken out loans and would throw colleges’ balance sheets into uncertainty. Here are some of the more prevalent points in the association’s report but for a more detailed look, click here:

  • Pay It Forward does not account for non-tuition costs like room and board.
  • Students who generally rack up the most debt – those at for-profit and private nonprofit institutions — would not be eligible for the program.
  • The program would have “enormous” start-up costs.

Early estimates suggest that Oregon would have to take about 3 percent of a former student’s earnings for 20 years for it to work. With that being said, what are your thoughts on Pay It Forward? Do you think it’s too soon to tell if this is a viable option for other states to adapt?

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