Oregon State Treasurer Ted Wheeler wants the state to borrow $500 million to start a fund that would help college students pay tuition and fees.

It’s an intriguing plan with a lofty goal, but lawmakers will need to balance its costs against the many other needs in this cash-strapped state. Wheeler has crafted his Oregon Opportunity Initiative with input from legislators, educators, students and business executives. It would create a permanent fund to help students pay for college and incur less debt.

From 2004-05 to 2011-12, average tuition and fees climbed 50 percent in Oregon’s universities, the treasurer’s office reported, at the same time that per capita income climbed 20 percent.

The state now offers $1,950 flat grants to students who qualify for financial assistance based on the federal FAFSA process, according to Wheeler’s chief of staff Tom Rinehart. But the state runs out of money after serving only about 2 in 10 of the qualified students on a first-come, first-served basis. Wheeler’s program would build a fund that would eventually help all who qualify.

The plan would provide only partial relief for student debt, which the treasurer’s office says averaged $24,000 for those graduating from an Oregon four-year college in 2010.

The stipend is granted for only two years, and is designed to supplement other sources, such as family contribution, other financial aid, federal Pell grants and borrowing, Rinehart said.

Tuition and fees for a full-time student total just under $4,000 at Central Oregon Community College, so for a student seeking an associate’s degree, this grant could pay close to half the cost. But for a student seeking a bachelor’s degree at University of Oregon, which costs more than $9,000 in tuition and fees for each of four years, this assistance would be a small percentage.

The treasurer’s office expects to spend a maximum of 5.5 percent to borrow the money and to earn at least 7 percent on the invested funds. It calls these conservative assumptions, saying it is now borrowing at 2.7 percent and that the 20-year earnings on public pensions averaged 9.1 percent. With additional deposits in subsequent bienniums, the fund would eventually become self-sustaining, according to the plan.

The initial $500 million would use up nearly half of the state’s allowed borrowing power in this biennium, and the debt service is estimated at about $51.6 million in this biennium, paid from the general fund. And that’s just the first step; the fund’s success would depend on continuing deposits in future years.

Rinehart said there’s lots of support for the proposal, part of which will require voter approval, and no overt opposition. The concern, however, is about what other needs the state might have for its borrowing power. Many believe, he said, that bonding power should be used only for hard investments, such as bridges and roads. He argues for investment in human infrastructure through education.

It’s an appealing argument, but not a conclusive one at a time when there are many investments to be made, including others in education.