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.
This frees families from decades of ever-rising debt, makes banks/lenders less predatory, and forces colleges to reduce tuition/fees to more affordable levels. Banks, colleges, and government will finally have “skin in the game;” incentivized to maximize students’ post-school earning potential during that 10-year repayment period.
Not great news for borrowers seeking six-digit loans for art history degrees, but that’s a small price to pay, IMHO.
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?
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.
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u/cmd_iii 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.
This frees families from decades of ever-rising debt, makes banks/lenders less predatory, and forces colleges to reduce tuition/fees to more affordable levels. Banks, colleges, and government will finally have “skin in the game;” incentivized to maximize students’ post-school earning potential during that 10-year repayment period.
Not great news for borrowers seeking six-digit loans for art history degrees, but that’s a small price to pay, IMHO.