Income Based Repayments | Now That's School Reform

The New, Rational Student Loan Payment Plan
Why we like this:
Because the concept of paying what you can makes far more sense than paying what you can't
Source: LA Times

Gist: They're calling the new plan "income-based repayment," but "realistic" sounds more apt to us. Essentially, the option allows those with student loans to make payments based on their discretionary income, not fixed rates. That means much smaller monthly bills during those first tough years out of school, and bigger payments once you're rolling in cash later on. If those days never come? After 25 years of paying what you can, your debt is forgiven. And it's wiped out after ten if you go work for the government.

So, we're certainly excited about the prospect of folks not being so crippled by the loans. But there is another message being sent here, one that we find utterly invaluable: income-based repayment encourages people to do good. If you know you'll never have to pay more than you can afford, suddenly a massive salary may not outweigh your ideals. We've seen too many friends over the years take jobs they didn't want because they had to make payments—if this plan can allow some of them to focus on changing the world instead of changing their bank statements, we'll all be better for it.

Photo by m00by

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  • Colin Doody

    I would agree that a default mentality exists - but the intention is to reward those who value both education and service, without the burden of debt. Lets hope our education system does justice in instilling a drive in our children to pursue excellence, be it charity work or work within a corporation. But lets also hope for a system in which the need for quick monetary returns doesn't outpace passion, education, and altruism.

  • Greg Geter

    Doesn't this continue to encourage the "I can't afford it, so I won't repay" mentality that is gripping our country today? With a plan like this, my daughter would be able to get a high-priced education and work for peanuts, never intending to pay the loan back. This teaches kids that there's really no true value in their education at all if it's worth stealing.