This article from the WSJ reports a proposal to make repayment of student loans a percentage of the student's income after graduation. The percentage and number of years during which payment occurs would vary depending upon the school, major, and perhaps characteristics of the student.
The article is a good introduction to signaling. Students might learn more about the earning potential of various majors when they see that one major requires 10% of their salary for 5 years while another major requires 20% for 15 years.
The article is also a good introduction to adverse selection and moral hazard. Who is more likely to choose this plan over a traditional fixed-repayment loan, someone who plans to work hard to earn high income or someone who prefers to enjoy life and wants to work enough to "get by". How does the requirement to pay a percentage of income to the lender affect the incentive to work?
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