3 ms·

Modest income sharing as an alternative to loans isn’t any more “indentured servitude” than taxes are.

by TulliusCicero 5y ago

dragonwriter 5y ago
ISA’s weren’t modest; they were heavier share than income-based student loan options.
- s1artibartfast 5y ago
  But they are also free of runaway interest and lifelong debt. Payments are higher if you succeeded, but the downside risk is lower. This is the fundamental tradeoff.
  - dragonwriter 5y ago
    > But they are also free of runaway interest and lifelong debt Federal student loans with an income based based repayment plan are free of both those things (fixed maximum repayment period and fixed interest rates at origination.)
    - s1artibartfast 5y ago
      Federal loans have maximum repayment periods of 10-30 years, but that does not mean the loan is forgiven at the end of this period. If you fail to make regular and complete payments, the loan can persist for the entirety of your life. By runaway interest, I mean compounding debt, not change of interest rate. If payment on a federal loan is low or non-existent, the debt will increase exponentially over time. Take for example a student who takes ~50K in debt, but fails to graduate or secure income to pay the annual interest. With a federal loan, payments may be deferred or reduced, but the debt will continue to increase with time. If not payed off, this will last for the student's life. With some ISAs, there may be no payments required, and the entirety of the debt disappears after X years.
      - dragonwriter 5y ago
        > Federal loans have maximum repayment periods of 10-30 years, but that does not mean the loan is forgiven at the end of this period. Yes, for income-driven plans that are paid as required, it does. > If you fail to make regular and complete payments, the loan can persist for the entirety of your life. If you don't pay an ISA as required it becomes an unpaid debt with all the normal features of unpaid debt, it doesn't just vanish if you fail to pay. So “federal loans don't disappear if you don't pay them”, while true, isn't really a difference.
        s1artibartfast 5y ago
        >Yes, for income-driven plans that are paid as required, it does. Thank you for sharing this, I was not aware and found supporting information here: https://studentaid.gov/manage-loans/repayment/plans/income-driven https://studentaid.gov/manage-loans/repayment/plans/income-d... >If you don't pay an ISA as required it becomes an unpaid debt with all the normal features of unpaid debt, it doesn't just vanish if you fail to pay. Correct, ISAs don't vanish if you meet the criteria for payment, but choose not to. This is only comparable to a federal loan, and one with an income-driven plan. This says nothing about ISAs verses other federal loans, and ISAs versus other private loans.

Modest income sharing as an alternative to loans isn’t any more “indentured servitude” than taxes are.

dragonwriter 5y ago

ISA’s weren’t modest; they were heavier share than income-based student loan options.

s1artibartfast 5y ago
But they are also free of runaway interest and lifelong debt. Payments are higher if you succeeded, but the downside risk is lower. This is the fundamental tradeoff.
- dragonwriter 5y ago
  > But they are also free of runaway interest and lifelong debt Federal student loans with an income based based repayment plan are free of both those things (fixed maximum repayment period and fixed interest rates at origination.)
  - s1artibartfast 5y ago
    Federal loans have maximum repayment periods of 10-30 years, but that does not mean the loan is forgiven at the end of this period. If you fail to make regular and complete payments, the loan can persist for the entirety of your life. By runaway interest, I mean compounding debt, not change of interest rate. If payment on a federal loan is low or non-existent, the debt will increase exponentially over time. Take for example a student who takes ~50K in debt, but fails to graduate or secure income to pay the annual interest. With a federal loan, payments may be deferred or reduced, but the debt will continue to increase with time. If not payed off, this will last for the student's life. With some ISAs, there may be no payments required, and the entirety of the debt disappears after X years.
    - dragonwriter 5y ago
      > Federal loans have maximum repayment periods of 10-30 years, but that does not mean the loan is forgiven at the end of this period. Yes, for income-driven plans that are paid as required, it does. > If you fail to make regular and complete payments, the loan can persist for the entirety of your life. If you don't pay an ISA as required it becomes an unpaid debt with all the normal features of unpaid debt, it doesn't just vanish if you fail to pay. So “federal loans don't disappear if you don't pay them”, while true, isn't really a difference.
      - s1artibartfast 5y ago
        >Yes, for income-driven plans that are paid as required, it does. Thank you for sharing this, I was not aware and found supporting information here: https://studentaid.gov/manage-loans/repayment/plans/income-driven https://studentaid.gov/manage-loans/repayment/plans/income-d... >If you don't pay an ISA as required it becomes an unpaid debt with all the normal features of unpaid debt, it doesn't just vanish if you fail to pay. Correct, ISAs don't vanish if you meet the criteria for payment, but choose not to. This is only comparable to a federal loan, and one with an income-driven plan. This says nothing about ISAs verses other federal loans, and ISAs versus other private loans.