If you're paying 3% of your salary for 24 years, it isn't free.

Speaking of the Oregon "tuition free" pilot program that would have graduates paying 3% of their salary to the state for 24 years after graduation. So many people are cheering the headlines (and a few are just as loudly condemning them), but their comments make it quite clear that they haven't bothered to actually read the articles that the headlines are attached to.

Considering that I'm currently paying more than 6% of my income in student loan payments, it may seem surprising that I am not a proponent of this plan. Well, there are many reasons for that, not the least of which that this is just another method of removing the "public" from public higher education. It continues to shift the burden from all taxpayers to the middle- and working-classes, while benefitting corporations and the wealthy.  

Oregon, in common with most other states, has been slashing the amount of public funding going to higher education, in order to protect tax breaks, deductions, exemptions, and rebates for corporations and the wealthy. This program does nothing to reverse that trend, but it certainly has diverted attention away from it. Do not misunderstand -- I am in no way arguing that the current system should be retained. I am, however, arguing that this does nothing to fix the underlying, systemic problem, which is the erosion of the social contract.

My other objections are more pragmatic than ideological. Let's start with the beginning of the process, the high school student from a low- to middle-income family who is applying for college. What does the student put on the FAFSA? Federal PELL grants are based, in part, on tuition and fees, but Oregon is no longer charging tuition. How will this affect the amount of the grant?

And if the student does get a PELL grant, how will that figure into what the student owes after graduation? It's not impossible that the PELL grant will go for fees, books, and living expenses, but what if the student works part-time in order to cover living expenses or has some other source of income? How can the excess grant money be used to pay off the student's debt to the state? And it is a debt to the state; make no mistake about that.

And what about those fees? Will fees still be charged? For in-state students, fees are anywhere from 50-100% or more of the amount of tuition. And states have been increasing fees on residents as a way around legal restrictions on tuition increases. The press releases don't address that issue.

Are there any performance requirements? Or can students just skate through with Cs and Ds? And there are some who would look at it as a four-year vacation, either not thinking about the future, or not worrying about paying back a mere 3%. What if a student is expelled for poor performance? When does repayment begin?

Now, what happens if our student drops out before graduation? Surely that student cannot be required to pay 3% for 24 years without a degree; at the same time, that student should pay something. How will that be calculated? And when will repayment begin?

But, our student isn't the kind to flunk out or drop out. Our student graduates. And goes on to graduate school. This leads to two questions : 1. Does our student have to begin repayment now or after grad school? and 2. Does this program cover grad school? Because that's where I racked up my loans, in grad school. As an undergrad I went to a state school, back in the day when public higher education was fully funded. My PELL grant covered tuition, fees, books and some living expenses. My work study job covered the rest, because, as a traditional young adult student, I shared a house with roommates and took the bus to campus.

Finally, our student graduates with that master's degree and for whatever reason is forced to take a low-paying position. Is there a minimum income threshhold for repayment? Or does our student have to begin paying 3% of that minimum wage salary, the one that doesn't quite bring in enough to cover rent, utilities, and other basic living expenses?

Which brings up the question of "What is income?" Is it wages and salary only, or would it include, say, disability payments? Retirement benefits? Capital gains? What about someone winning the lottery? Or coming into an inheritance? Is it the Federally Adjusted Gross Income, or actual income?

What if our student experiences some kind of financial setback, has huge medical expenses or losses due to a natural disaster or must care for an aging parent? Is there some mechanism for deferring payment? The student still has an income, but it is being stretched to the limits. It's not at all inconceivable that something of this kind would occur within the 24 years between 25 and 50.

What if our student moves out of Oregon? How will the state collect on the debt? Not that our student would ever dream of not making those payments every month. 

Let's suppose that our student was what is termed a "non-traditional student," that is, an older adult who is either going to college for the first time, returning to school to finish a degree that was deferred, or earning a graduate degree (assuming that this program applies to graduate degrees). These may be women who put their own education on hold until their children were grown, displaced workers who need to learn new skills, workers who are trying to qualify for promotions, or older people who want to fulfill a personal goal.

What happens if this student retires less than 24 years after graduation? Full retirement age is 66.5; that would include anyone 42.5 or older.

These students frequently have dependents, which gets back to the question of how income will be figured. They aren't 20-somethings just starting out, maybe with one baby, and relatively young, healthy parents. They are middle-aged adults, often with teenagers at home, and sometimes caring for aging parents. Will all of that be taken into account when "income" is figured?

And a couple more things :

What if 3% for 24 years is not enough? If they raise the percentage and/or time period, would that include everyone? And is there any kind of cap on either one? At what point would graduates once again be drowning in debt?

And participants will lose all or most of the education tax credits, at least as they are currently written. http://www.irs.gov/uac/Five-Ways-to-Offset-Education-Costs.


According to the press releases, this was based on the Australian FEE-HELP system. So, how do they really compare?

1. Under FEE-HELP, tuition is charged, but payment is deferred. Therefore, a student owes a fixed amount upon graduation, which can be paid back more or less quickly, as the student is able.

2. The student can defer 25, 50, 75, or 100% of the tuition each semester, thus minimizing the amount that must be repaid.

3. Students must maintain a minimum gpa and are restricted on the number of credits they can take in a semester.

4. It is available to undergraduates and graduates, although there is a lifetime limit on the amount any one person can owe.

5. It is a national program; the Australian government pays the money directly to the university, then collects the repayments through the Tax Office.

6. There are financial incentives for making additional payments (5% of payments over $550).

7. There is a minimum income threshold -- payments don't kick in until you are making more than poverty-level wages.

Now, I am aware that one of the objections that the more rightward leaning have to this program is that, in their words, someone who "works harder and better and so is more successful" will ultimately pay back more in actual dollars than a loser who goes into education or librarianship, but that is one of the few things that I like about this program. Those who benefit the most financially would pay back the most, while those who provide a service to society would benefit from a half-way decent standard of living. I would find that far preferable to the situation we have today, where the amoral, unethical bloodsuckers who are draining the public dry are rewarded with high salaries and low taxes and those who struggle to improve our country and its people are drowning in debt.