Student loan debt is staggering, topping one trillion dollars and corroding the prosperity of a whole generation of Americans.

University of California – Los Angeles student Eitan Arom proposes a solution that he thinks is helpful, to students, taxpayers, and the schools.

Procrastinating on the issue of student debt is no longer an option. The Congressional Budget Office estimated that last year’s interest rate freeze cost the government $6 billion, an unwieldy sum considering the federal government’s unstable budget outlook.

Instead, some real leadership needs to emerge.

The budget’s variable interest rate proposal means that students will pay more when it costs more for the government to borrow. But just as a variable rate protects the federal stake in the student loan market, so too should students have some insurance against the prospect of unmanageable debt.

By tying interest rates to an individual student’s ability to pay, Congress could protect its own investment while improving access to higher education.

When the government offers a loan to a student at a subsidized rate, it essentially buys a stake in that student and his or her future. More education leads to higher lifetime wages, so when that investment begins to pay off, it makes sense for the government to take a share.

For example, imagine that I take out a Stafford loan and graduate from UCLA with a degree in business economics. Allow, further, that I use my degree to land a six-figure salary as an investment banker.

Had I not gone to college, I would likely be making much less; that discrepancy was made possible by the taxpayer money used to subsidize my college loan.

So instead of setting a fixed interest rate for each student who takes out subsidized loans, the taxpayer should lay claim to a certain percentage of that student’s future income. This repayment model has a myriad of benefits to students, who only pay as much as they are able, and for the government, which can levy funds by charging a higher rate to students with higher incomes.

…The Obama proposal makes a move in that direction by seeking to cap loan repayments at 10 percent of discretionary income. But 10 percent of after-tax income is still a sizable sum, especially for students struggling with their loan payments in the first place.

For the students making $100,000 salaries two or three years out of college, whoever they may be, perhaps an interest rate of 10 percent is reasonable. But for college graduates with annual incomes in the ten or twenty thousands, a rate of 2 or 3 percent should be put in place.