Writing for Slate, former New York governor Eliot Spitzer advocates a new system for student loans:
the concept is simple: Instead of paying upfront or taking loans with repayment schedules unrelated to income, students would accept an obligation to pay a fixed percentage of their income for a specified period of time, regardless of the income level achieved...This idea has a lot of potential - so I give it a rating of 4 diamonds. Now, if I can just remember where I got the idea of using diamonds to rate things...
The smart loan model would permit all students to fund their own educations, guaranteeing that finances would no longer be a barrier to the education our work force needs. It would also free parental savings for other obligations—such as health care—at the same time that it would recognize that the student's ability to repay will grow over time as income increases through a career. The current system of hitting graduating students with immediately sky-high payment obligations just as they enter the work force is nonsensical...
1 comment:
This idea is patterned after the policy already adopted by the Acton Business School headed by Jeff Sandefur. It's also similar to the "human capital contracts" proposed by Gary Wolfram for Cato.
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