The Rubio-Obama Ticket (to College)
Republicans and Democrats in Washington are expected, if not required, to disagree. So it's both surprising and encouraging to find two Republicans proposing social programs that are more ambitious than the president's.
The Republicans in question are Senator Marco Rubio of Florida and Representative Tom Petri of Wisconsin. They are both concerned with the high cost of college and, like President Barack Obama, want to make it easier for students to repay their loans.
One in 7 Americans with federal student loans now go into default within three years of graduation. That's the highest rate in almost two decades, and with the federal government issuing some $100 billion in new loans this year, rising default rates could risk the economic future of millions of young people.
Worst of all, it's entirely unnecessary. People generally default on their student loans because their incomes fall or they stop working. Under Rubio's proposal, students with federal college loans would be enrolled in what's known as income-based repayment: Their monthly payment would be a fixed proportion of their paycheck. Everyone's repayments would be affordable.
That isn't a new idea; the federal government already offers income-based repayment programs for some low-income students, and Obama has proposed making those programs more widely available. What makes Rubio's proposal noteworthy isn't just that everyone would be eligible for income-based repayment. It's that every borrower would automatically be enrolled.
That's a useful step forward, because under the current system, the borrowers who could benefit the most from income-based repayments aren't necessarily the ones who are signing up. As with other social programs such as retirement plans, harnessing the power of inertia can be good public policy.
Petri's plan would go one step further: Students would have their loan payments automatically deducted from their paychecks. Processing payments through the tax-withholding system means most borrowers simply won't have the option of falling into delinquency and default. If they're not working one year or don't make enough to pay taxes, they would have no obligation to pay anything that year.
Using the Internal Revenue Service to collect student loan payments for millions of Americans would be a huge technological undertaking and would require a significant expansion of the agency's scope and responsibilities. At some point, it's reasonable to ask: Is the IRS doing too much? It's a question many conservatives, including the junior senator from Florida, can be relied upon to keep front and center.
There are other details to be worked out. If former students take longer to pay off their loans, they will end up paying more in interest. They could be allowed to increase their payments, which Petri's bill would do, or the government could use the revenue from greater interest payments to reduce interest rates.
Another concern is that, under the current system, all outstanding loans are automatically forgiven after 20 years; if students are making lower monthly payments, it stands to reason that the government will collect less money. The Obama administration has proposed limiting the amount of money that can be forgiven, while Petri's bill would replace loan forgiveness with a cap on accrued interest.
All that said, the focus on making it easier for students to repay their loans is welcome. And if two people as far apart as Marco Rubio and Barack Obama can agree on the outlines of a solution, it may be promising as well.
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