The Income Based Repayment (IBR) program, which took effect in 2009, is designed to lighten the student-loan burden for some students. The basic idea is to limit monthly payments to less than 15% of disposable income. If a student makes these payments for 25 years, any remaining balance is forgiven, meaning that taxpayers essentially pay the rest off. President Obama just announced his intention to lower this to 10% of disposable income and 20 years of repayment before forgiveness. These proposed changes, as well as IBR in general, are bad for the following 6 reasons.
1. IBR treats the symptom rather than the disease.
Perhaps the most fundamental reason to end IBR is that it is treating the symptom (excessive college debt) rather than the disease (excessive college costs). IBR is essentially trying to fix the problem of students borrowing too much for college… without stopping students from borrowing too much for college. All it does is say that the government will pay for some portion of it in the distant future. To steal a line from Wolfgang