SALEM, Ore. ― Students are facing a rising loan burden, and Oregon’s state treasurer wants the state to be able to take on debt of its own to help them out.
Ted Wheeler proposed a little-known measure that will appear on the November ballot. Measure 86 would amend the state constitution, creating an endowment that could be used only for student financial aid. It would also allow the state to take on debt to fill the kitty. He wants to start with $100 million.
Oregon’s college tuition is high, and state support for financial aid is low compared with other states, Wheeler said.
“A lot of low-income and middle-class students are being shut out of education and job-training opportunities at exactly the time when employers are telling us that advanced education and training are more important than ever and will continue to be more important in the future,” Wheeler said.
Wheeler is quick to point out that issuing bonds to fill the endowment is only an option; the Legislature could also fill fund it with a direct appropriation or seek philanthropic support. Voter approval is no guarantee that the fund will actually materialize because lawmakers are not obligated to commit funds.
Oregon’s constitution generally prohibits the state from going into debt, but voters have created exemptions to allow bonds backed by the general fund for specific purposes. They are generally used for construction projects, such as prisons and buildings for state agencies, universities and community colleges.
Critics worry about the consequences of incurring debt, which has traditionally been used only for construction projects, to pay for student aid. Some also say it would be better for the state to address the underlying costs of providing a college education.
“In the short term, it may help individual students. But it makes the whole system less affordable overall,” said Steve Buckstein, senior policy analyst at the Cascade Policy Institute, a libertarian think tank in Portland. “When someone else is paying the bill, the costs go up.”
Bonds, if they’re sold, would be repaid by the state general fund over 30 years, not by the investment earnings. Interest on the fund ― Wheeler estimates about $5 million a year for every $100 million invested ― would pay for financial aid like scholarships and vocational training.
There’s been little campaigning on either side. Nobody has even registered a political action committee to oppose it. A committee in favor has raised about $20,000 from a handful of individuals, and PACs supporting banks, credit unions and the Northwest Health Foundation. Wheeler has lined up support from a variety of education, business and community groups, including university presidents, labor unions and the Oregon Business Alliance.
Without public polling, it’s hard to know how the measure will fare with an electorate that’s both skeptical of debt and tired of rising college loan burdens.
Oregon’s existing state-funded financial aid program, known as Opportunity Grants, doled out about $50 million in scholarships to in the 2012-2013 school year to 33,000 Oregon students attending colleges and universities, both public and private.
Wheeler argues that those scholarships are both inadequate and undependable. They’re subject to year-to-year appropriations, so students getting a scholarship one year can’t depend on it being there the next. And there’s only enough money for about 20 percent of the students who apply, according to data from the Oregon Student Access Commission, which administers the program.
If voters approve, competition for dollars would be fierce. Legislative leaders said college affordability is likely to be a hot topic next year, but they were noncommittal about how a student aid endowment might fare against competing priorities.
A college aid endowment “will have to be considered in the context of a variety of proposals,” said Jared Mason-Gere, a spokesman for House Speaker Tina Kotek, D-Portland.