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<p>So let’s say a student graduates with a $100,000 worth of education. If he takes out a 20 year loan he pays a set amount each year until the loan is repaid. He is repaying 2012 dollars with future discounted dollars. Under the proposed plan he pays 5% of his salary for 20 years. With very low inflation, this could be a good deal, he may pay less than with the fixed rate loan. However with rampant inflation and concomitant salary increases he could end up paying more over time than if he had opted for the fixed rate loan. </p>
<p>Calculations aside, it would take the resources of the IRS and Mossad combined to monitor and enforce such a scheme.</p>