State Treasurer Ted Wheeler met with student, business and higher education leaders last week drawing support and raising some questions about his plan to help ease the burden of higher education costs for students wracked with debt. The Opportunity Initiative would create a 30-year, $500 million bond program that would stabilize an existing grant program and would ultimately contribute to a more stable workforce, said Wheeler, who has been state treasurer since 2010.
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Since 2004-05, the cost of tuition and fees has risen 50 percent in the State of Oregon, while per capita income has increased only 20 percent, according to data provided by the Treasurer‘s office.
The state’s Opportunity Grant program provides small grants of about $600 per term to two out of 10 students who apply. That number would be expanded under the Opportunity Initiative by 50 percent, Wheeler said.
The program would be expanded to help specific students such as those pursuing vocational or technical training or degrees in high-demand areas such as science, technology, engineering or math, officials say. Another goal of the fund would be to improve on-time graduation rates.
Rachel Mayhill, student body president at OSU-Cascades, liked the idea of creating a funding source that would reach more students, but questioned whether it would solve higher ed’s underlying problems in the state.
“That will cover my books for the year,” she said. “It’s great if they want to make the Opportunity Grant program more stable, but we have a bigger problem here.”
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“We have to play catch up,” he said.
Those present at the meeting were generally in support of the proposal, but raised questions about the legislative priorities and funding of the bond measure.
“I still want to know where the funding for the annual debt service is coming from,” said Oran Teater, a former city of
“These aren’t tax-free bonds so the interest rate will have to go up. They would have to convince the legislature and voters to tack on a little debt each year.”
Despite the challenges, Teater said the state needs to do something to tackle the problem of mounting student debt. He called Wheeler’s plan a good start.
Asked about the affordability of issuing a $500 million general obligation debt bond at a 5.5 percent interest over the next 30 years, Wheeler said the state would be making good use of precious resources.
“If we pass this, the state will still have a very conservative debt profile,” he said.
Some of the details of the plan include:
- After the initial $500 million investment, the legislature would make smaller contributions into the fund over time. Treasury officials say the 5.5 percent rate of return is conservative considering the state’s getting under 3 percent currently.
- The fund’s investment portfolio would generate revenues that would go back into the fund. Over 30 years, the fund could grow to $6 billion, according to Treasury Department estimates.
- By the time it reaches its full funding capacity within 30 years, it would help all students with two years of tuition support.
- Wheeler has introduced the Opportunity Initiative as Senate Bill 11 and Senate Joint Resolution 1. Passage in the legislature would require a change in the state constitution. If passed by the state legislature, the initiative would need to be approved by voters as early as November.
For more information, visit the Treasury Department’s web site at: http://www.oregon.gov/treasury/AboutTreasury/Pages/Opportunity-Initiative.aspx.
