Students can Manage Debt More Easily, Saving Taxpayers
TL/DR –
Student loans are a significant burden for many Americans, with the attorneys general of Kansas and Missouri leading lawsuits against the Biden-Harris administration’s student debt relief efforts. The author proposes a solution wherein the federal government pays for college education at rates negotiated by the Secretary of Education, with students who benefit from this scheme paying incrementally higher federal income taxes until retirement. The author believes this self-funded, pay-it-forward model would be equitable and not burden taxpayers who do not directly benefit, and could reduce financial barriers to higher education.
Student Loans Shadowing Debtors, Economy, and Loved Ones
Numerous Americans struggle with substantial student loans, with the attorneys general of Kansas and Missouri opposing the Biden-Harris administration’s attempts to resolve this issue. The issue of student loan debt affects not only students, but also their families who may have to compromise their financial goals like growing a business or saving for retirement to ease the burden of these loans.
Need for a Universally Accessible Fiscal Path for Students
There is an urgent need for a financially responsible and accessible path for students to complete their higher education without being burdened by debt. The current and future students who bear the brunt of exorbitant personal loans look to a brighter, debt-free future.
A Novel Proposal for Student Debt Relief
A solution could be for the federal government to bear the cost of education for high school graduates, with the entire bill negotiated by the U.S. Secretary of Education. Much like the Inflation Reduction Act that allows the Secretary of Health and Human Services to negotiate prescription drug prices. In return, students would pay incrementally higher federal income taxes until retirement.
Progressively Taxing the Ordinary Income at Marginal Rates
Through this federal approach, the program could be self-funded and sustained. For instance, participants would only utilize the program’s funds during their school years and past participants would contribute annually only upon reaching the 22% marginal tax rate applicable to single filers making at least $47,150, and married joint filers making at least $94,300.
Funding for the Program and its Impact
The fund would increase for taxpayers moving higher up the tax bracket. Those who participate in the program and have a higher earning year would contribute more, while those earning less would contribute less or nothing. This entirely optional program would be funded only by beneficiaries and never by those without the financial resources to contribute during a lean year.
Influence of a Pre-existing Fund on College Attendance
A study by Washington University in St. Louis showed that kids are three times more likely to attend college or post-high school training when informed that money is available for tuition. Removing the financial obstacles to higher education could have a profound impact on students and families across the nation.
This simple, fair, and accessible program would aid in reducing the student debt crisis. Institutions could then redirect resources towards academics instead of financial aid, and graduates could start their careers without the burden of debt. The worst-case scenario? A generation free of student debt. The best-case scenario brings us closer to the country we all deserve.
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