NEW YORK TIMES: …The historical social contract used to be straightforward. All citizens were eligible for generous government college subsidies in the form of low tuition at public colleges and universities. Graduates “paid back” that subsidy in the form of larger tax payments — and in most states, higher marginal tax rates — on the additional income that their diplomas helped them earn.
Some graduates earned more and paid more; some earned less and paid less. Nobody said that a college graduate who ultimately paid back less in taxes than the amount of his or her original tuition subsidy had “defaulted,” because it was understood that luck, business cycles and career choices vary, and that the collective result for all students was good for society.
By moving more students into IBR, the federal government is essentially replicating this arrangement. Once again, those who earn more pay more, returning the full amount of their loan, plus interest, before the 20-year forgiveness threshold is met. Those who earn less, for whatever reason, pay less. Nobody will ever default simply because they can’t afford to pay… (more)
