Student Loans: The Ultimate Stealth Tax

From Bipartisanpolicy.org
Income Gap from Pew Research
Partisan Higher Ed Views from Pew Research
  1. The Department of Education must buy all outstanding education debt held by private lenders. Private education loans must be banned.
  2. All federal student loans must be immediately refinanced at the same rate the Department of the Treasury uses to set market interest rates plus half a percent to cover administration costs. This would take the average loan fixed interest rate from around 6%-8% to under 1%.
  3. Repayment must be set at about 5% of a borrower’s adjusted gross income. Every year a borrower works full-time 10% of their remaining loan balance is forgiven tax-free. This is pro-rated for part-time workers. Public service workers get 20% forgiven annually.
  4. Establish a hard cap on the annual amount a student can borrow set at the average cost of four years of tuition and fees across the country for undergrads, ten years for graduate and professional students. This will make cheaper schools more attractive and push expensive ones to rein in costs, especially if a national cost and student outcomes database is established.
  5. Borrowers who have paid off their loans in the last 10 years will be allowed to claim a non-refundable tax credit, spread over a maximum of five years, to compensate for their past losses being trapped in the system.
  • Borrowers who paid off their loans already can zero out their federal income taxes for a few years
  • Debt-averse potential students will see a clear path to escaping their debt, particularly if they do public service work like the military, firefighting, police, or teaching
  • You can eliminate other redundant education programs or tie good ones like Pell Grants in to pursue cost savings
  • Students who choose high-cost institutions will pay much more over time than those who head to cheaper ones that offer the same quality of education

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Author, rogue systems analyst. True Neutral autistic pro-science anti-authoritarian rural cat fanatic, he/him/they, married. West Coast = Only Coast :)

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Andrew Tanner

Andrew Tanner

Author, rogue systems analyst. True Neutral autistic pro-science anti-authoritarian rural cat fanatic, he/him/they, married. West Coast = Only Coast :)

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