Eliot Spitzer has not completely disappeared in disgrace. He still has the mentality of Don Quixote or the Lone Ranger, riding out to right all wrongs.
Here’s a snippet:
Marketed under the decidedly unappealing name of “income-contingent loans”—how about we call them “smart loans” instead?—the concept is simple: Instead of paying upfront or taking loans with repayment schedules unrelated to income, students would accept an obligation to pay a fixed percentage of their income for a specified period of time, regardless of the income level achieved. Suppose a university charged $40,000 a year in annual tuition. A standard 20-year loan in the amount of $160,000 (40,000 times four) would produce an immediate postgraduate debt obligation of $1,228.50 per month, or $14,742 per year, not sustainable at a salary of $25,000 or anything close to it. Under a smart loan program, the student could pay about 11 percent of his income, with an initial payback of $243 per month, or $2,916 per year, which is feasible at a job paying $25,000. If, after five years, the student’s salary jumped to $100,000, payments would jump accordingly and move up over time as income increases. After 20 years, assuming ordinary income increase, the loan would be paid off.
This proposal is pretty radical. But like the health care system in the US, the higher education system is something of a mess right now.
Actually, the two messes are related, because as a people-intensive business, higher education is saddled with steadily rising health care costs that it must pass along to the consumer. In fact, if one looks closely, the rise of college tuition closely mirrors the rise in health care premiums in the US.
One thing Spitzer
No matter what one thinks of his private choices, Spitzer is a smart guy who has a lot of intelligence to inject into this debate. And unlike Don Quixote, Spitzer has a track record of knocking down a few of those windmills.
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