Via Ezra, a great suggestion from Robert Reich on federal student loan policy:
...several of my students who will graduate next week tell me they would have liked to go into social work or into the non-profit sector or provide legal services to the poor. One had his heart set on becoming a painter. Another became passionate about archeology and had wanted to go on a dig in the Sahara. But they can’t do any of these things because they have tens of thousands of dollars of debt. They need jobs that pay the rent while they repay their loans.
When they begin their university studies and take out college loans, most students don’t know exactly where their interests lie. That’s what college is all about -- discovering what you want to do with your life. But America’s increasing reliance on student loans to pay for higher education is directing millions of young people away from what they really want to do -- from careers that could contribute a great deal to their communities and to the nation as a whole, but don’t get them out from under their college loans.So here’s an idea that might allow more students to pursue their real interests when they graduate: Make repayment of government-subsidized loans depend on how much money they earn. Say that everyone has to pay ten percent of their income for the first ten years of their full-time work. And then the loans are considered paid off.
The moral hazard here, of course, is that some people might choose to deliberately make less money for the first ten years after graduation in order to reduce their payments, but really... I think we can all admit that isn't terribly likely. After all, you could make a similar argument with a progressive tax code - higher marginal rates for higher incomes might lead some to seek a lower salary in an effort to minimize their tax burden - but do you actually know anyone who has ever even thought of doing that? Of course not.
When I think back over the twists and turns my life has taken over the 15 years since I graduated from college, it really brings home just how little I knew about myself and what I wanted for my life back in 1993. And the kids sitting in my classrooms today are no different. But for one thing, of course. When I left school I left without any debt; when they leave, many of them will take with them loans the size of a home mortgage. If our goal as a society is to allow every individual to maximize their own potential, that makes absolutely no sense.
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