Problem: Student loan debt is massive and hamstringing millions of people who were lied to about education. However, these people (myself included) took out loans and thus should be personally responsible for paying them back. It is unfair to almost everyone to have student loans forgiven outright.
TLDR Solution: All student loan payments are fully tax creditable up to your annual tax value.
Solution Example 1: An individual with $30,000 in student loans graduates and obtains a job making $60,000 / year. The estimated income tax at that level is $6,000. If the individual pays the $6,000 in student loan payments, then the ending income tax would drop to $0. This would allow this individual to pay back their student loans in ~ 5 years without having strain themselves more as they are already paying this income tax.
Solution Example 2: A citizen with a salary of $150,000 / year pays about $27,000 in income tax, but has $25,000 left on their student loans. They are paying the minimum payments because the subsidized interest rate is lower than their investment returns. They are making a mathematically smart move by drawing out their payments. However, the longer the payments occur, the harder it will be to dismantle the broken system. With this policy, this citizen would be able to pay back 100% of their loans with financial beneift in a single year.
Solution Details:
- Payments would only be creditable up to your actual income tax. This means there would be no additional “refund” if you pay more. The moral reasoning behind this is that other taxpayer money would be refunding the payer vs just the payer’s actual tax rate.
- There is a general moral stance that the government should not profit off its citizens and by taxing + student loan interest rates means double dipping on the citizen.
- While college is not for everyone and yes the current system is vastly broken, we should encourage more people to be educated. Tax credits like this are an encouragement saying that the government does not need your money if you’re investing in yourself.
- As a staunch Libertarian myself, I am FULLY AGAINST any form of income tax. I believe we should move to a consumption tax (the only Constitutional way). However, we cannot magically cut the income tax in the next four years due to the massive debt we have racked up. It will take at least a decade to dismantle the current broken system. As such, this policy would be a temporary way to lower paid income tax, lower the student debt without shifting responsibility, and regardless of our feeling about the education system, promote higher educated citizens.
- If this policy is enacted at the same time as income tax reform to a consumption tax, the consumption tax would be creditable as well for student loan payments.
About the author:
- Lifelong Libertarian (LP) who understands we cannot move back to a fully Libertarian government in a single administration and thus supports politicians / policies that move us toward LP values.
- Executive Cybersecurity Governance Consultant with education and background in electrical engineering, computer engineering, energy, healthcare, and big tech.
- Notable voting/support record includes: Ron Paul, Gary Johnson, Jo Jorgensen, Tulsi Gabbard, Robert F Kennedy Jr., and Chase Oliver.
- Policy recommendations will always be founded in common sense, simple execution, never take away another person’s rights principles with the end goal of shrinking the size of the Federal government and return power to We the People at the State level.