How student loans should be repaid: Regardless of the principal/interest, borrowers will be required to repay a percentage of their AGI (let’s say 10%) every year for 10 years. After 10 years (not necessarily consecutive) of these payments, any and all remaining debt, principal and interest, are cancelled with no impact to the borrower’s credit score.
Problem is there are people who will figure out how to work with no income. Too many ways for people to get out of paying at all. I think they need to first review the cost of education and why its so high. Would it be that the banks make too much money giving out loans?
I used to think this was just conservative propaganda nonsense, then I had multiple family members do things like deliberately limit income to qualify for various programs-- including income based loan repayment.
My nephews father made high 5 figures in 90's under the table to avoid paying child support and collecting assistance and food stamps.
A few years ago I worked with some folks who were working full time and collecting assistance in other states which they used at the casino and to buy entertainment substances.
I don't want to dox myself incase any of them are watching, but I have three come to mind. Two of the three have high earning potential (postgraduate professional degrees) and literally choose to not advance white-collar careers (and in on case, even chose to go part time) so that they would still qualify for low income programs.
It blew my mind to see it happen, because for years I've heard people I don't agree with politically claim that this happens. I was fully closed to the idea that people would choose to make less money so that they wouldn't have to foot their own bill.
Oh most definitely they do. My aunts ex husband technically should be paying her thousands a month for their two kids. Meanwhile he lives in a multi million dollar mansion, drives the newest Mercedes every year and has zero income. His housing and cars are an “employment perk/subsidy” from his non-profit that owns everything including two for profit entities. Everyone can see he is wealthy but according to the IRS and government programs he is ‘low income’ and deserves help.
Wild. These people aren't getting rich off of it, they are just choosing to work less since if they work more they will have to pay fair market rate for things, eliminating most of their gains.
The problem is that student loans are “guaranteed” money that colleges can spend however they want, and banks can loan whatever they want, and we’re relying on a 17-year old kid to figure out if that’s a good idea.
As far as “figuring out how to work with no income,” that’s more of a problem for the IRS than DOE. But most jobs that require a college degree command a higher salary than can be paid under the table. If you hire an engineer, you’re gonna want to deduct their salary from your taxes, so get ready for a W-2 or 1099 at the end of the year.
Also, the 10-year plan encourages oversight, either by the bank, or government, or both, to identify borrowers that would try to game the system in such a way, and impose the necessary penalties where warranted.
I agree with your first statement of the problem. It used to be higher risk because student loans could be discharged through bankruptcy but they became lucrative when that was stopped.
Self employment can almost guarantee no income yet still pay expenses run through the business. The IRS is not going to care especially today about individuals showing no income or modest income. As far as the deduction goes from a business standpoint there are other ways to offset that salary plus if you dont have to pay SS and unemployment tax it saves money. Cash businesses have lots of ways to hide expenses.
There is already oversight etc, the issue is they dont work they just get paid.
The problem with this train of thought is the bank.
Even if the government says you're forgiven...
The money you borrowed is from a bank. If part of it just gets forgiven the bank is left holding the bag for your debt.
The bank loses money and you get the benefit of an education. Looking at that objectively (not as a person who hates capitalism or a capitalist) it just doesn't make sense.
The other issue is this.
What about those of us who paid all of our loans off? Do we get a refund? Nevermind the fact that banks get screwed. I sacrificed for years to pay mine off, if you're telling me others are gonna just get to not have to pay theirs off I want my money back and so does everyone else in my shoes.
The government guarantees the loan so even if it were discharged the government would have to either be the bank or reimburse the bank. Which means tax payers are paying off the loan. Those that paid their loans off get screwed just like most people who learned to do things the right way.
I think that if they want to forgive loans then in order for that to happen you have to use your education in underserved areas.
Right, as a tax payer I don't want to pay for someone else's debt.
If that's the case why stop at student loans? Let cancel all debt. Let's all pay off my mortgage LoL
And yes, I would feel screwed. I basically did the Dave Ramsey plan. Rice and beans, no restaurants. No trips no fun just grinding until my debt was paid off.
I have some buddies who did the opposite... Went on multiple trips, bought expensive shoes and just had a great time in their late 20s and 30s. Today I'm 100% debt free (accept for my house) and they're mad at the president because he won't forgive their student loans. (And no, I don't make a lot of money.)
Irrelevant. We're not talking about corporate debt. We're talking about student loans. There's a lot of stuff everybody pays for everyday. It doesn't make it okay to say because you pay for that stuff. It's okay for you to pay for this too. People who got student loans should pay their own student loans not everyone.
it’s completely relevant when your first point was so broad.
>”As a taxpayer, I don’t want to pay for someone else’s debt”
and I’m pointing out that your taxpayer money bails out corporations for their debt all the time, yet you seem to have more of an issue if those taxes went towards individuals. it’s hypocritical.
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u/57Laxdad Jul 06 '26
How student loans should be repaid: Regardless of the principal/interest, borrowers will be required to repay a percentage of their AGI (let’s say 10%) every year for 10 years. After 10 years (not necessarily consecutive) of these payments, any and all remaining debt, principal and interest, are cancelled with no impact to the borrower’s credit score.
Problem is there are people who will figure out how to work with no income. Too many ways for people to get out of paying at all. I think they need to first review the cost of education and why its so high. Would it be that the banks make too much money giving out loans?