Once upon a time, babysitting helped students pay for college. Today, the Class of 2013 will graduate with an average $35,200 in college debt. Short of taking out a second mortage on a house, the only way to take on that debt is to take out a five-figure loan.
It's numbers like these that motivated the state of Oregon to develop its "Pay it Forward, Pay it Back" program, put forth by political activist Barbara Dudley and economics professor Mary C. King. The Oregon State Senate passed the bill unanimously on July 1 and now a pilot program is in the works.
How it works
Think of the program as a venture capital fund but for college students. In return for free tuition, students will deduct 3 percent of their earnings from monthly paychecks for the first 25 years after graduating.
It's a daring proposal, but Oregon is confident its system can produce enough success stories to subsidize the struggling artists, researchers, and philosophers who can't pay the bill. According to TechCrunch, who broke the story, if a student earned only $600,000 over 25 years, his tuition would amount to roughly $18,000, or the average cost of attending an in-state university.
In contrast to Peter Thiel's fellowships, which aim to reduce students' debt load and promote entrepreneurial endeavors, Thiel's program does not provide for a college degree. Instead it grants $100,000 to aspiring entrepreneurs on the premise they leave school for two years to pursue their big idea.
So which system is best for aspiring entrepreneurs? That of course will depend on the student. Medical school won't be keen to expect entrepreneurs straight out of high school, though college dropouts like Bill Gates may have flourished in Peter Thiel's program.