Pay it forward for the future
President Obama and Vice President Joe Biden are scheduled to make a rare joint appearance at Lackawanna College today to talk about making college more affordable and a better value.
Their timing is exquisite, as parents write tuition checks and students take more loans for the impending academic year.
In that regard Mr. Obama and Mr. Biden can do something of a victory lap, since they are fresh from a bruising legislative battle to preserve reasonable interest rates on federally subsidized student loans, at least into 2015.
But the administration should take note of an unfolding pilot program in Oregon, a form of which also is being proposed in Pennsylvania by John Hanger, a candidate for the Democratic gubernatorial nomination.
Known as "pay it forward," the system would alter conventional student borrowing. Rather than piling up huge debt as they matriculate, students entering college would agree to repay their state-funded tuition with 0.75 percent of their annual income over the 20 to 25 years following their graduation. (Under Mr. Hanger's proposal, the repayment period would be 15 years and the percentage of annual income would be higher, depending upon the level of degree.)
The state would kick off the program with borrowing of its own through a bond issue but, over time as graduates enter the work force, the program would become self-sustaining.
Mr. Hanger contends that the Pennsylvania program he proposes would be self-sustaining after 22 years.
Critics in Oregon contend that students entering majors that tend to result in high incomes would avoid the state schools where the program would apply. That issue could be resolved by capping annual payments. Mr. Hanger's plan would be voluntary.
Other major forces also are at play, especially the rise of "massive open online courses" now offered by many universities and multi-school consortiums, which emphasize specific knowledge and skills more so than general degrees. Those courses, if they are embraced by employers, significantly could reduce higher education costs by diminishing the need for full degrees.
Higher education is America's principal economic driver. The administration and Congress should look not only to affordable borrowing for access to higher education, but at innovative means to reduce the cost of college and to help students finance it.