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I disagree strongly with the notion of tying loan repayment to income. There are already too many students majoring in areas with a very limited job market. This, of course, is a big part of the reason many students are unable to pay back their loans. Students need to think about how exactly they are going to make a living with whatever skills they are acquiring. This includes a fall back option, such as for history and English majors who hope to teach, but may not find a job due to education cutbacks, or an overabundance of people in their fields hoping to teach. If there is serious doubt about a student being able to pay back a student loan in a given career, perhaps he should choose a different career.

Lucy Lu

My firm hires new college graduates in Georgia. Based on my information, many college graduates' annual salaries are around $40, 000. Those kids are from Georgia Tech, Emory, and UGA, which are very decent schools. It is hard for me to believe the average college graduates' average salary is $70, 000, as indicated in the post.

Whitworth Alex

Like Lucy, I find it very hard to believe that the average college graduate makes $70,000. A quick google search returns many results showing the average income of college graduates much closer to $45,000.

This link is from the BLS: http://www.bls.gov/emp/ep_chart_001.htm
It shows $55k at the median.

If you're going to provide such an unbelievable statistic, please post your source.

James Gualtieri

I think a great remedy would be to make universities partial guarantors on the debt of their students (i.e. you can default on some fraction of your debt through bankruptcy). This aligns university incentives with those of students: providing students with a skill set that is valuable. One might say that these incentives are already aligned, I don't think that is necessarily the case. With loans easily available for prospective students, universities play a balancing act with respect to their current students and attracting future students. I think this would result in schools devoting more energy (and money) to career services and reduce the amount of students studying so-called "soft" majors.

One drawback is obviously that universities would then prefer students with no debt. But, I think this is such a small part of the total student population that any effect would be very small. Alternatively congress could pass a law requiring admissions decisions be blind with respect to financing.

I like this idea because it is somewhat market oriented. If schools provide value above their cost then they will remain open. The likely results would be: a reduction in the amount of universities and a larger fraction of a school's resources going towards majors they expect to provide value in the job market.

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