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Color of Money

College Loans Need Creative Change

By Michelle Singletary
Sunday, November 28, 2004; Page F01

For many people, a higher education is the ticket to a high- paying job.

But what happens when the cost of that ticket becomes a deterrent to choosing a career that will pay a modest or middle-income salary?

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"My worry is that even if people can afford to take out the loans, their career choices are going to be biased in favor of paying off their loans -- biased in favor of careers that will make more money," says former labor secretary Robert B. Reich.

I recently had the pleasure of hearing Reich speak to several hundred financial aid professionals attending a conference in Phoenix.

Reich, who is now the Hexter Professor of Social and Economic Policy at Brandeis University, spoke with compassion for the many people who are graduating from graduate and professional schools with a record amount of student loan debt.

But worrying isn't going to help people pay for their education. We have to come up with bold, creative solutions to address the rapidly rising costs of higher education and the steady reduction in government-subsidized help to finance such education, Reich said.

In fact, Reich has an idea -- an idea I think is worth debating.

What would you think of a student loan program in which people who borrow to attend graduate school would then pay back a small percentage of their annual salary over a 10- or 15-year period? Everyone would pay the same percentage regardless of income.

All the money would go into a general student loan fund and then be lent to others for graduate school. Private lenders could provide the loans, which would be guaranteed by the federal government.

"This would allow people to follow their hearts rather than make a lot of money," Reich excitedly told the conference attendees.

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