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Saturday, Might 20, 2023
The Borrower’s Dilemma And A Tax-Based mostly Resolution To The Pupil Debt Drawback
Kate Souza (J.D. 2022, UC-San Francisco), Be aware, How Can I Ever Repay You? The Borrower’s Dilemma and a Tax-Based mostly Resolution to the Pupil Debt Drawback, 73 Hastings L.J. 129 (2022):
The rising value of upper training relative to wage development implies that faculty is not the positive path to monetary safety it as soon as was. Whereas the price of tuition ballooned over the previous a number of a long time, authorities funding for increased training diminished. College students have made up the distinction by borrowing extra. For a lot of debtors, giant scholar loans end in unmanageable debt that makes their monetary futures much less safe. Pupil debt additionally harms society and the financial system. If the federal government needs People to proceed to have entry to increased training, it should discover methods to make increased training extra reasonably priced
Politicians acknowledge the issues posed by the present historic ranges of scholar mortgage debt. They lately proposed to cancel giant swaths of scholar mortgage debt. Nonetheless, debt cancellation will not be a very good resolution. It’s costly, unfair, and affords mere non permanent reduction from an issue that can proceed to plague future debtors. A greater resolution would supply lasting reduction
To alleviate the scholar debt drawback, the federal government ought to permit debtors to repay their scholar loans utilizing pre-tax {dollars}. This might allow debtors to maintain extra of their earnings, whereas incentivizing each the pursuit of upper training and the reimbursement of scholar loans. No matter whether or not President Biden or Congress cancels a portion of scholar mortgage debt, the federal government ought to ease problematic monetary burdens on scholar mortgage debtors by permitting them to make use of pre-tax funds to repay their debt.
https://taxprof.typepad.com/taxprof_blog/2023/05/the-borrowers-dilemma-and-a-tax-based-solution-to-the-student-debt-problem.html
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