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This is how student loans in the UK work. "You’ll repay 9% of your income above the repayment threshold – earn less and you won’t repay. Once you leave your co

This is how student loans in the UK work. "You’ll repay 9% of your income above the repayment threshold – earn less and you won’t repay. Once you leave your course, you’ll only repay when your income is above the repayment threshold. The current UK threshold is £25,725 a year, £2,143 a month, or £494 a week." [0] [0]: https://www.ucas.com/student-finance-england/repaying-your-student-loan https://www.ucas.com/student-finance-england/repaying-your-s...

davidclark22 7y ago
The US has a similar repayment program called Pay As You Earn (PAYE). It ties your payment amount to 10% of your income that is above 150% of the federal poverty level. This only applies to federal loans (not private loans) and requires opt-in, which probably causes a lot of people to not do it. https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven https://studentaid.ed.gov/sa/repay-loans/understand/plans/in...
jointpdf 7y ago
I haven’t seen this mentioned in this thread yet, but there are income-based repayment plans for US loans. There are different plans, but it works much the same way as above, roughly: if you earn above a income threshold (~$20k), then you pay 10% of your income until a) the loan is repaid or b) 20 years have passed (remaining balance is discharged. But, you have to apply for these programs, and many people don’t know they exist and loan servicers have incentives to keep people on traditional repayment plans. It’s not a cure-all: you can still default, and there are cases where you can end up repaying more than a traditional loan. Nevertheless, it should be the [/puts on sunglasses]...default option. https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven https://studentaid.ed.gov/sa/repay-loans/understand/plans/in...
- ummonk 7y ago
  The problem is that the federal government (with taxpayer money) is acting as a middle man here. So universities don't have an incentive to make their students employable. If universities were getting paid directly based on income, that would create the right incentives.

davidclark22 7y ago

The US has a similar repayment program called Pay As You Earn (PAYE). It ties your payment amount to 10% of your income that is above 150% of the federal poverty level. This only applies to federal loans (not private loans) and requires opt-in, which probably causes a lot of people to not do it. https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven https://studentaid.ed.gov/sa/repay-loans/understand/plans/in...

jointpdf 7y ago

I haven’t seen this mentioned in this thread yet, but there are income-based repayment plans for US loans. There are different plans, but it works much the same way as above, roughly: if you earn above a income threshold (~$20k), then you pay 10% of your income until a) the loan is repaid or b) 20 years have passed (remaining balance is discharged. But, you have to apply for these programs, and many people don’t know they exist and loan servicers have incentives to keep people on traditional repayment plans. It’s not a cure-all: you can still default, and there are cases where you can end up repaying more than a traditional loan. Nevertheless, it should be the [/puts on sunglasses]...default option. https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven https://studentaid.ed.gov/sa/repay-loans/understand/plans/in...

ummonk 7y ago
The problem is that the federal government (with taxpayer money) is acting as a middle man here. So universities don't have an incentive to make their students employable. If universities were getting paid directly based on income, that would create the right incentives.