Last year, the students at Portland State University developed a plan to deal with rising student loan debt. We provided the details on “Pay It Forward, Pay It Back” in August. Since then, the state of Oregon has seen their student loan debt balloon to such a high level that even the amount of defaulted loans written off by the banks reached almost $14 billion. This was before the final loan default numbers for 2013 came in.
The original plan was to expand access to public colleges by eliminating tuition and fees as up-front requirements. Graduates would then pay back the cost of both with a percentage of their salary over a period of time. Both would be determined by the amount owed when they completed their education.
Close But No Cigar
As noted previously, experts in higher education, financial aid, and economic theory quickly pointed out the limitations of the plan; in particular that it depended on the Oregon State government and population being willing to fund everything up front and that every student would need to have a job waiting at graduation in the U.S. where their wages can be attached if they change their mind about paying.
The workgroup at Portland State who developed the idea has kept pressing forward. The group’s head, Director Rob Fullmer, believes they have worked through the major issues and now have a plan they want to push to the Oregon Legislature this year for a 2015 approval. Once they have that, then Fullmer wants to start running with a test group for the 2016-17 school year.
Better Plan, New Presentation
In a report to the Oregon Higher Education Coordinating Commission this year, Fullmer stated that his group has done the math this time and he believes they have produced a program that is ready to be tested with a test group of students pursuing a four-year degree at an Oregon public college or university. It should be noted, that Director Fullmer is a part of the Commission, but as a non-voting member.
The primary changes are to the percentage of income required for repayment and the repayment period itself. Students will be required to pay back between three-and-a-half to four percent of their annual income over a monthly basis, depending on how much they earn. This would be for a period of 20 years or until they have repaid their student debt (which has been changed to include books as well as tuition and fees), whichever comes first. Previously, the repayment period was open-ended and the income percentages were not defined. Fullmer’s group has also suggested now that the repayment period should begin two years after a student leaves school.
Fullmer’s group also has two suggestions for setting up a test group. The first is to select at random a group of Oregon high school seniors who would begin their higher education in the 2016 school year. They will be enrolled into the program regardless of which university, technical college or community college they choose to attend in Oregon. The second is to allow all students from a couple of randomly selected high schools to participate beginning in that same year.
Previously, any student debt was going to be held interest free. Now, the group does recommend a one percent interest rate for students who attended a four-year program. Students who complete two-year programs at a technical or community college will be charged an interest rate of 0.74 percent. Students will still need to fill out a FAFSA. Anyone that qualifies for Pell Grants and other financial aid or win scholarships can apply for those monies against housing and food expenses if allowed.
The Next Steps
Fullmer’s presentation to the Commission was well received, but there has not been a recommendation made to the state legislature yet. In order to begin either test group suggestion, his group will need a positive recommendation and then the Oregon legislature will need to vote to fund one of them no later than in their 2015 legislative session.
To stay on top of what is happening in Oregon and in other states looking for a solution to relieving student debt, please visit us here at Student Debt Relief News regularly.
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Student Debt Relief Loan Refinancing Advertiser Disclosure
College Ave: College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
College Ave Refi Education loans are not currently available to residents of Maine.
1 – The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation.
2 – $5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. Information advertised valid as of 04/26/2019. Variable interest rates may increase after consummation.
3 – This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.