Student Loan “PayBack Plan”

When the total student loan debt exceeds the total credit card debt in the US, and it has for some time, it’s time to give a damn.

Here are a few facts:

1)   The average student loan debt approaches $40,000.

2)   The total of all student loan debt exceeds $1.5 Trillion; that’s right, $1.5 Trillion!

3)   The cumulative total of all credit card debt falls short of the total student loan debt by more than $620 Billion.

Education isn’t a luxury.
It isn’t a privilege.
It’s not something one acquires on impulse.
Education, especially a post-secondary, higher education, is achieved through serious effort and commitment over an extended period.  It helps shape and define individuals, companies, cultures, even countries.
Higher education is tantamount to progress…to sophistication, competitive advantage and success.

Student loans are key to most students going to college; moreover, these loans serve as a dis-incentive to many who are debt averse and thus opt out of going to college altogether.

We need Americans to be the best-educated people on the planet.
We need incentives, not obstacles, to attract students to college and keep them there through graduation…then, for some, on to graduate school and to advanced degree programs in medicine, law, engineering and the like.
We don’t need obstacles.

Here’s an idea: The Student Loan “PayBack Plan.”
Retain the current student loan lending system to fund campus delivered and on-line courses.  The key to this system is determining the borrower’s economic situation and qualifying need.

The PayBack.
First, the student has to receive a degree or, if they choose, multiple, advanced degrees.
Second, the graduate has to get a job.

The PayBack Program lasts for ten years from the date of graduation and, if additional degrees are earned, the same terms apply per degree.
Ex: A single graduate with a BS degree in Computer Science, and having an owed balance on their student loan of $100,000, can repay the loan in full with a job that pays an average annual salary (over ten years) of $75,000.  If married, withholding is less thus requiring a higher average annual income.
The PayBack Program will repay most loans and, at the very least, reduce outstanding balances, after ten years, to a manageable number.
In lieu of the student making separate payments to repay these loans, the federal government will credit, dollar for dollar, their outstanding student loan debt with their federal tax withholding payments.  Available tax credits and tax deductions on student loan interest would disappear; moreover, most of the admin cost associated with managing student loans would also disappear.
The program has only two qualifiers:  (a) Get an education then (b) get a job.

Income taxes repay the student loan.  It’s simple and straightforward.
The lifetime income potential of a college-educated person averages more than $1M when compared to someone with a high school degree.
The lifetime tax benefits of a college educated (and beyond) taxpayer is ten times greater than the average size of a student loan.  That’s a compelling ROI.
C’mon Washington.
It’s time to Smarten’ Up.

It’s time to invest in a higher educated population.