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Agreeing on college debt

From an editorial Monday on Bloomberg View:

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 Sen. Marco Rubio of Florida and Rep. 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 seven 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. Petri’s plan would go one step further: Students would have their loan payments automatically deducted from their paychecks. 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.

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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