I don't suggest that the student take out a loan based on future earnings. I agree that this is difficult to impossible to predict.
I suggest that the student doesn't take out a loan at all, or if they do, base it on CURRENT earnings. That is, if they can currently afford $100/month, only take out a $100/month loan at most. That could be a $15000 loan at 5% for 20 years. Or a $5000 loan at 5% for 5 years. If you cannot pay for school with this loan, don't take out the loan.
It's not a crime to work for a year and save up before going to college. But you have to save--not buy a car or a house or a party every weekend. 2000 hours * $8/hour = $12000 after taxes. If you're supporting yourself, you can't save for college and you could never repay a student loan. Go find a $10/hour job and save $4000 in a year. Then you can pay your way through school.
Then, if you're lucky you can pull in 6 figures 5 years out of high school. If you're not lucky, you can double your income. If you're unlucky, you got a college education debt free.
That took three paragraphs to explain. I don't think it is beyond the grasp of a high school senior. If it is beyond their grasp they should definitely not take out any loan whatsoever.
Perhaps this should be a story problem on every single SAT or ACT test. Getting it wrong should divide your score in half.
I don't suggest that the student take out a loan based on future earnings. I agree that this is difficult to impossible to predict.
I suggest that the student doesn't take out a loan at all, or if they do, base it on CURRENT earnings. That is, if they can currently afford $100/month, only take out a $100/month loan at most. That could be a $15000 loan at 5% for 20 years. Or a $5000 loan at 5% for 5 years. If you cannot pay for school with this loan, don't take out the loan.
It's not a crime to work for a year and save up before going to college. But you have to save--not buy a car or a house or a party every weekend. 2000 hours * $8/hour = $12000 after taxes. If you're supporting yourself, you can't save for college and you could never repay a student loan. Go find a $10/hour job and save $4000 in a year. Then you can pay your way through school.
Then, if you're lucky you can pull in 6 figures 5 years out of high school. If you're not lucky, you can double your income. If you're unlucky, you got a college education debt free.
That took three paragraphs to explain. I don't think it is beyond the grasp of a high school senior. If it is beyond their grasp they should definitely not take out any loan whatsoever.
Perhaps this should be a story problem on every single SAT or ACT test. Getting it wrong should divide your score in half.