Traditionally, when the state government borrows hundreds of millions of dollars, it uses the money to invest in physical assets such as roads, bridges and buildings.

Oregon Treasurer Ted Wheeler, however, has a different and intriguing idea for making good use of the state’s borrowing capacity. He wants to use proceeds from two, $250 million bond sales to invest not in structures, but in brains — specifically those belonging to college students.

Wheeler proposes creation of a Student Opportunity Initiative to make a college education more affordable for generations of Oregonians. This proposal is long ranging and daring enough that it someday could take its place next to other Oregon innovations — the Health Plan, the Bottle Bill and the Beach Bill — as a piece of landmark legislation.

We think it’s one of the best uses of a state investment. Oregon students are this state’s best and most important investment.

Helping all students who need it

The Opportunity Initiative — Senate Bill 11 and Senate Joint Resolution 1 — would directly attack the issue of college access and affordability by providing a deeper pool of scholarship money available to people trying to pay for higher education. If the Legislature and voters approve Wheeler’s idea, the state would sell a total of $500 million in general obligation bonds in 2014 and 2015. Those funds would form the corpus of the Opportunity Fund, which would generate investment returns for the purpose of funding student aid grants.

The Opportunity Fund would require no new taxes. As the state is selling these new bonds, it will retire older debt, which will give it the funding stream needed to pay off the bonds. In the meantime, the $500 million endowment, if all goes as planned, will grow at a faster rate than the low interest the state would pay on the bonds. The increasing size of the fund will produce money immediately for student aid. With additional state contributions, however, Wheeler envisions a fund equaling $6 billion within three decades.

The mathematics behind the Opportunity Fund can get a little complex, but the goal for this proposal is easily expressed: Eventually, if the state continues to direct money into the Opportunity Fund, it could generate enough investment returns each year to meet the unmet financial need of every Oregon student for two years of his or her post-secondary education.

That’s a big improvement from what today’s students face when trying to pay for higher education. People attending four-year institutions usually end up with between $17,250 and $32,450 in student loan debt. The average student loan debt is about $26,600 in four years.

Long-lasting consequences

When coupled with the relatively low cost of the state’s community colleges, the Opportunity Fund raises the real possibility that every Oregon student who wants to continue his or her education could do so. This means much more than personal growth for these students. Such a whopping investment in Oregon’s human capital will raise the state’s per-capita income, attract quality industries to Oregon and reduce college debt loads that are now burdening young people as they enter the work force.

The Opportunity Initiative requires action by the Oregon Legislature, which must pass SB 11. The Legislature also must forward a referendum to the statewide ballot to create a permanent Opportunity Fund that is constitutionally protected.

This proposal, before Sen. Mark Hass’ Senate Education and Work Force Committee, deserves to be sent to voters. Rather than simply bemoaning a continual shortage of money, this is a rare chance for Oregon to do something bold in the name of education.

Contract Publishing

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