Like everything the left proposes, this idea seems interesting on paper but as George Leef points out, practice is another issue.

From Each According to His Earnings

Until about five years ago, few people said much about America’s federal student loan system. There was no talk of a “crisis,” and discussions about change were  pretty much limited to tinkering around the edges.

Today, however, with rapidly rising default rates on student loans and numerous tales of the hardship that repayments cause recent graduates, we are hearing a lot about the need to dramatically change the system. I recently examined one writer’s argument in favor of eliminating the pressure on college graduates by making public higher education free. Here, I’m going to look at a far more reasonable reform, namely an income-contingent repayment system.

Last spring, Oregon made headlines with a bill, subsequently signed by Governor John Kitzhaber, to establish a pilot program for students in that state’s public colleges and universities. Under the proposed system, students would not pay any tuition while in school, but instead would repay the government a percentage of their income after graduation for some number of years. (The percentage that has been discussed is 3 percent and the number of years 24, but nothing has been carved in stone, since the bill only instructs Oregon’s Higher Education Coordinating Commission to design a program, which would then have to be approved through the political process.)

The Oregon proposal has been greeted with enthusiasm by some, but others question its feasibility. George Mason University economics professor Tyler Cowen, for example, thinks that it faces an adverse selection problem. He wrote on his Marginal Revolution blog, “At the margin, I would expect this to attract people who don’t have a vivid mental picture of the distant future. Furthermore, the terms of the program discriminate against those who expect high earnings or for that matter those who expect to finish.”

Thus, if Oregonians expect this plan to be self-sustaining, it probably won’t be.