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by chadcf
4475 days ago
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There's a plan here in Oregon to try and work up a viable system to do this. The idea is called "Pay it Forward" and you would essentially pay a 3% tax for 20 years after you graduate. I'm not entirely sure it will ever come to pass, but it's not a terrible idea IMO. It may not save money, but it does mean you get an automatic income based repayment plan, you can never be in default and you get an automatic deferral when unemployed. That said, it doesn't really do anything to fix the problem of skyrocketing education costs which is less than idea... |
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... however it's actually even worse than this meager sum:
- Salary increases over your lifetime, and the highest earning decades are 40s and 50s, so I the average salary over the first two decades is probably lower than $48k. Maybe this is mitigated by restricting to only people who at least attempt college?
- Oregon has a slightly lower-than-average income.
- People are more likely to sign up for this program the less they think they'll earn.
- Once someone has graduated, they are not incentivized quite as strongly to pursue high salary positions.
- Some loss due to deaths, defaults, emigration, black market off-the-books income, etc.
- Depending on how it's set up, this may cut into the tax revenue to the state.
- It doesn't take into account inflation or the time value of money.
I understand the point of the program is a social benefit to the state, but I think it's useful to examine the reasonableness of the proposition in a market context. If someone offered you a bond to take the other side of this deal, how much would you pay for 3% of the first 2 decades of income of a hypothetical freshman entering college this year? What about a 1/1000 share of a portfolio of a thousand freshman?