Income Contingent College Student Loans Are Worth Serious Consideration
University of Virginia Professor David W. Breneman to has a new new book, Financing American Higher Education in the Era of Globalization (Harvard Education Press).
Questions around higher education accountability surfaced throughout the discussion: Who plays a role? Should it fall to the states, or to the federal government? Breneman believes both play a role, and he emphasized that universities must have “skin in the game” as well. He also talked about the need for fresh ideas in reforming higher education finance and added that one of the most promising new “old” ideas to come about recently is the notion of “income contingent loans,” an idea Education Sector outlines in Affordable at Last: A New Student Loan System. Under this system, students pay back loans based on each individual’s earnings. “The key is making it automated through the IRS,” said Breneman. Source: Education Sector
Income contingent student loans are a great way to reduce loan default and debt. The system was proposed in 1955. According to Affordable at Last: A New Student Loan System “total student loan debt in the United States exceeded total credit card debt”. Unfortunately, not all graduate students are able to find a job in several months. In this case, it’s very hard to start mkaing payments on your loan.