You know, 9 years after graduating (not from grad school, just undergrad), my loan balances are still near $20,000! There have been times when I've barely been able to make payments and I was on interest only plans for five years. Those first five years, the idea of payments based on salary would have been very appealing. However, I consider myself lucky--I graduated when interest rates were very low, made my payments on time for the required 4 years and earned a 2% decrease on my interest rate, plus lower payments. Ironically, it was at the same time that I was finally able to afford higher payments... maybe the system is flawed in that regard: lower rates and payments come as a reward; to earn the reward, you must be perfect and pay a high amount at a time when you can least afford it! I agree with Becker, though--I borrowed something like $35,000 to attend a school with a great reputation in my field. It has been hard to repay sometimes, but always, always worth it.

Although I have recieved a priceless education at Drexel University in Philadelphia, PA, I sometimes wonder whether it was worth it or not. After 6 years in Drexel University, I owed approx. $112,000 in school loans. Buying a house was almost completely ou tof the question because of the enourmous monthly payments. I still would think that payments based on my salary would be an incredible idea, yet I can't see this sort of idea ever actually evolving into something that loan offices and banks would feel comfortable in participating with.

You're article is correct. It is a huge risk. I was lucky to go to college at a time when my tuition was $26 per credit/average class was 4 credits and books were cheap. High School grads: go to a community college and then a cheap state school and work 20 hours a week and live with Mom and Dad.

The never ending question of does it pay to invest in college. We have 5 children 2 decided to not follow mom and dad's way of life and not complete college. They can't figure out why brother and sister are so much better off than they. The three college grades are on their 3 or forth house, the non grads are still renting. We see a lot of wasted use of money by many young people, yes college is expensive, but not going is far more expensive.

Exactly. Plus when the older workers referred to above get downsized and their jobs sent offshore, how about freezing their expenses: rent, food, bills, credit card interest rates, until they can re-train to re-enter the workforce.

Gary Becker has not come up with anything new! In Australia, for more than a decade, we've had a system of government-based loans for university education where loan repayments are based upon your taxable income after you graduate.

Upon graduation, if you earn below a certain income, you pay no repayments - ever (and your children don't inherit your student loan debt, either).

Each tax year, if you income is above a certain level, you have to pay an additional 4%-8% income tax above your top marginal rate each year until your loan is paid off. The principal of your loan is indexed to the CPI rate, so it is not charged to you at a commercial loan rate.

This is a much fairer and more efficient system, enabling children from poor families to study.

The name of the system has changed over the years. Originally, it was HECS (when I was studying at university). Now I think it is called FEE-HELP.

In his book Naked Economics, Dr. Charles Wheelan points out that this type of variable rate loan has already been tried at Yale and at a national level. It failed miserably both times. According to Wheelan, the reason is simple--the students have an idea of the jobs they want after graduation and will select a loan most advantagous to them. A student who aspires to be a teacher will most likely choose the variable rate, a student that aspires to be an investment banker will likely choose a fixed rate loan. While students do change majors and career aspirations in college, most end up doing something similiar to what they originally planned. Consequently, the loan program will end up lending an inordinate amount of money at below market rates, and very little at above market rates. The plan is not self-sustaining.

A far better idea is to educate students about the true cost of student loans, and encourage other options other than taking on massive student debt. Other options include attending a cheaper college (studies show that if you're smart enough to get into Harvard, you'll do well regardless... and you won't have $100K in student debt), attending a community college and then transferring credits to a 4 year institution, serving in the armed forces, working part time, applying for scholarships etc. By and large, the massive quantities ($20K+) of student debt incurred are taken on by choice--the student wants to go to this particular school right now and financing is the only way to do it.

As an American taxpayer (and a recent college graduate, May '06) I believe that everyone should have the opportunity to attend college and I am willing to pay taxes that support subsidized loans up to a point. While I am willing to give everyone the opportunity to attend their local public university, I am unwilling to subsidize someone else's wants--a particular university, right now. Most prospective students would do well to re-evaluate their collegiate needs versus their collegiate wants. It might save them a big bill in a few years.

What hasn't been addressed in the "is it important to go to college" debate is WHEN is it important to go to college. I just don't think that all 18-22 year olds have enough life experience to make informed choices about the careers they want to pursue, and don't have enough experience with money to fully analyze the cost/benefit ratio of pursuing a particular degree.

Overall, people who have college degrees do better -- no one disputes that. But it's not a universal truth (my non-degreed fiance makes close to three times what I do), and a 4-year degree is no longer a guarantee to anything... including a job. My 4-year degree landed me a job making $25K/yr doing customer service. I could have easily gotten that job without the education, especially considering my 4+ years work experience, and that the degree cost me $20,000 to get in the first place! Oh, I forgot... I was also unemployed 6 months before finding that job. Not even the Container Store would hire me.

But I, like many, went to college after high school because I didn't know what else to do, and because that's what I was SUPPOSED to do. Had I waited a few years, worked, and figured out what I wanted before taking the plunge, I'm convinced that I would have been much better off. And I wouldn't still be $13,000 in debt. In many industries that don't require highly specialized training, you can get pretty far simply by being smart, opportunistic, and a hard worker. It's not until you're approaching management level that a formal education starts to matter.