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ERIC Number: ED044072
Record Type: RIE
Publication Date: 1967-Dec-28
Pages: 10
Abstractor: N/A
Reference Count: 0
Contingent Repayment Education Loans Related to Income.
Brannon, Gerard M.
This paper explores some questions about the use of income for determining repayment of educational loans. The plans generally call for a level of repayment to cover the initial advances, plus interest for a college graduate with average income, but would require less than full repayment for the students with low income, and over full repayment for students with high income. The recommendations from the Zacharias Report are reviewed, one of which is a buy-out feature whereby the successful student can minimize excess payments by opting at any time for repayment on a straight loan, 6% compound interest, basis. The question that must be answered is: where on the continuum of loan plans, from the straight bank loan to the pure contingency loan, do we want to be? To address this problem, the question of income as a good measure of liability is examined, including that of nonworking wives with education loans, and the conclusion is reached that an income tax on successful borrowers, as a means of covering losses of the loan fund, appears less fair than a general tax. Some implications of a contingency loan fund are examined in terms of the size of the loans, and some questions are asked that must be answered before a definite policy decision is made. (AF)
Publication Type: N/A
Education Level: N/A
Audience: N/A
Language: N/A
Sponsor: N/A
Authoring Institution: Department of the Treasury, Washington, DC.