I spoke with one of our readers who suggested a new related idea for discussion on the matter of providing some relief to students with loan debt: namely, whether providing tax benefits for paying back student loans is a technically feasible and desirable policy in our current economic climate. Specifically, he noted that the government should consider:
making paying back an educational loan like contributing to a 401k for tax purposes . . . [This] should make sense. Any money you put into the loan payback is typically untaxed and not included in your salary.
Our reader considered this idea:
ever since President Obama started discussing higher taxes on salaries while running for President. [He] figured that it just did not make sense for graduates with huge loans. They should be able to pay off all of their loans before being taxed at such a high rate.Accordingly, this proposal should be considered in the context of graduate students who can be expected to earn taxable income over the level at which President Obama has proposed to raise the marginal rates.
See The Wallet Pop Blog for a discussion of a similar idea