To combat rising college tuition and student debt, Oregon Treasurer Ted Wheeler is proposing to issue $500 million in general obligation bonds to increase available student aid. Voters would have to ratify a constitutional amendment to create the Student Opportunity Fund.
Wheeler unveiled details of what he calls the Opportunity Initiative the day after Governor Kitzhaber delivered his annual State of the State address. The governor proposed public employee retirement system and prison sentencing reforms to squeeze out savings to boost K-12 school funding.
Kitzhaber also reiterated support for higher education investment to help Oregon achieve an ambitious goal of 80 percent of its adult population having a postsecondary degree or certificate to ensure a competitive Oregon workforce in the Information Age. That's where Wheeler's idea joins the conversation.
Wheeler says Oregon's commitment to student assistance has lagged the national average by 20 percent, while Oregon students attending state universities or community colleges have faced tuition and fees exceeding the national average by 18 percent.
"One result," Wheeler says, "is that student debt is soaring for those students." The average student borrower graduating from a public Oregon 4-year college, he adds, has $24,000 in debt, up 21 percent from five years ago.
Under his plan, which Oregon lawmakers must approve and send to voters, the state would issue general obligation bonds and use income from investing the money to bolster student financial assistance. Bond sale proceeds would be placed in a constitutionally dedicated fund and money only could be withdrawn for postsecondary student scholarships.
Wheeler estimates in the short term that investments from the fund could increase the available amount for need-based Oregon Opportunity Grants by 50 percent. He predicts the fund could grow up to $6 billion in 30 years, generating enough income "to cover the 'needs gap' for two years of postsecondary education for every Oregon student."
As public college and university tuition has risen in response to declines in state financial support, the legislature has bumped up funding for need-based student aid. However, the lines have grown longer, stressing available funding and resulting in capped amounts for awards. Moreover, Oregon students are excluded who are financially eligible, but attend private, for-profit postsecondary institutions that are career-oriented.
While Wheeler's legislative proposal is silent on how expanded student aid would be spent, his website suggests using it as incentives for:
• Critical degree programs in the science, technology, engineering and mathematics;
• Vocational training and other workforce development programs; and
• On-time graduation, which reduces student costs and, ultimately, student debt.
"A highly trained workforce is a net positive for the state's economy and can help save costs of other public services," Wheeler claims, in justifying the use of public bonding for student aid. "This plan applies not only to college-bound students, but to apprenticeship programs and vocational training. Studies have shown states with a better trained workforce have a more robust, diversified and healthy economy."
Left unsaid in Wheeler's press rollout of the Opportunity Initiative is that more student aid will be crucial for low-income Oregon families and struggling, financially independent young adults to gain any kind of postsecondary certification, let alone an associate or bachelor's degree. Oregon's 40-40-20 goal aspires to have 40 percent of adults with at least a bachelor's degree and another 40 percent with at least a postsecondary certificate.
The Oregon Student Access Commission reports that nearly 29,000 Oregon students received Oregon Opportunity Grants totaling more than $43.3 million in the 2011-2012 academic year. A similar number of students were expected to receive grants capped at $1,950 during the current academic year. Kitzhaber's proposed 2013-2015 budget recommends increasing Oregon Opportunity Grant funding to $113.7 million.
This chart shows how many students received Oregon Opportunity Grants over the previous three biennia and where they attended college.