Oregon Introduces its “Pay It Forward” Student Loan Program
The US state of Oregon proposed a new investment model to manage student loans. According to this model, dubbed as the "Pay It Forward" student loan program, students enrolled at public universities would have free tuition; this was in exchange for 3% of earning during the first 25 years after graduation.
The new investment model worked just like a venture-capital portfolio that gets its earnings from a few star investment. The result would be an underpayment of the tuition in college, as the cost of college would be subsidized by the five star businessmen of their school.
The investment plan proposed by Oregon was not entirely novel. According to the New York Times, economist Milton Friedman proposed it in 1955. In addition, Yale University piloted the same program for their students even before federal loans were introduced.
The state's proposal was seen as a hybrid between the old loan model and Peter Thiel' investment approach. Oregon was optimistic that public universities would produce enough bright graduates to justify the high cost of college.