AEI Report: Replace the Federal Student Loan System With an Income Share Agreement Program
Beth Akers writes about why we should replace federal student loans with government-sponsored income-share agreements in a paper for AEI’s new series, Sketching a New Conservative Education Agenda.
Key Points
- The higher education narrative has been dominated by the student loan crisis as of late. While the magnitude of this problem is often oversold, borrowers do sometimes need help.
- However, debt forgiveness plans, such as those proposed by Sens. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA), deliver the biggest benefits to those who need it least.
- A better solution would be a government-sponsored income share agreement, in which the amount due each month depends only on how much the borrower is earning, and a simplified IRS-managed income withholding repayment system.
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Beth Akers is a senior fellow at the Manhattan Institute and a former Council of Economic Advisors economist. Follow her on Twitter here.