patrick.net

If college education actually cost $100k (for example) to provide, then why is it unrealistic that the student pays it off over an amortized period of time at a low interest rate. Isn't that exactly what a tax plan is????? Except with the tax plan, you pay for it whether you use it or not, you never get to stop paying, and you don't get any choice over what school the money goes to. Doesn't that seem worse in every possible way? It's not like lenders are making bank on gouging student loan interest rates, its like 1-2% or something.

If the argument is that 100k is a ridiculous amount for school to cost, then how is paying for it with taxes or debt forgiveness going to fix that in any way ever? At least with a direct responsibility for a high tuition, people will be choosing to get cheaper and equal or nearly equal alternatives via price substitution...

Here is my take on the solution to this problem:

1) Reinstate the ability to declare bankruptcy to discharge student loan debt BUT make there be a 10 year discharge period, with a 10% income repayment cap. This allows people to get out of their debt in the event of life events, but doesn't let them off the hook entirely. It also returns responsibility to the lenders to lend less money if the student doesn't have a good prospect of finding a job with the degree they intend to pursue (or have other means of paying).

2) If the student applies for bankruptcy after completing a degree, the school becomes liable for 30% of the debt remaining after the 10 year payoff period is over for the student. This gives schools some incentive to not steer students into majors that won't let them pay the bills.

What do you guys think?