Commentary
The U.S. Department of Education on Wednesday released new rules for income-based repayment of student loans, in what amounts to nothing less than a new socialism of higher education.
The scheme will cause a massive inflow of loans into the new system and cost taxpayers hundreds of billions of dollars.
Income-based repayment is affordable by definition. Currently, borrowers pay about 10 percent of their discretionary income over about 20 years, and whatever’s left—including all accrued interest—is forgiven.
Such a plan should be reserved only for people who have no other way to pay a larger amount, because it keeps them from defaulting and therefore maximizes loan payments in an affordable way….