[andrewaylett]

Surely the first step is to stop issuing loans in such a way that will cause the next generation of students to suffer the same problems, freeing us up to sort out the problems of previous generations without moral hazard.

The UK had what I think was a really nice set up, although it's now not nearly as palatable. My student loan had an interest rate tied to inflation, and repayment was a fixed amount of my income above a limit, collected via the same mechanisms used for income tax. Any unpaid loan would be written off when I turn 60.

The modern system is similar, but the interest rate has been decoupled from inflation which means that instead of paying back essentially the same value, no matter how slowly you pay it off, it's now definitely better to pay more earlier. Which makes it much more like a regressive "graduate tax" that you only have to pay if you don't earn enough.

[BoxOfRain]

> The UK had what I think was a really nice set up, although it's now not nearly as palatable. My student loan had an interest rate tied to inflation, and repayment was a fixed amount of my income above a limit, collected via the same mechanisms used for income tax.

My problem is that it's presented as a loan but is in effect a tax. I would rather have a graduate tax which was honest on the face of it rather than wilfully misleading students that it's an ordinary loan. The 'loan' framing is harmful in my opinion, because if student loans were regulated like actual loans the government would have much less room to effectively change the deal after the fact.

I also feel a lot of the current social and political toxicity around the student loan system comes from it being effectively a tax which you can get out of by lucking into having rich parents who pay your student fees upfront, it rubs people up the wrong way on class grounds. A graduate tax would avoid this problem as well.

[andrewaylett]

With the system as it existed in 2000, it was very much "free money". That was before the introduction of fees, which are still not applicable for Scottish students studying in Scotland, and in combination with the interest rate increase would very definitely tip the balance for me.

I have a decent career that means I've paid off my loan. I can easily imagine that many folk with fees and modern loans won't ever even cover the interest payments.

[nly]

It _is_ a loan because you can pay it off.