BORROWING AGAINST YOUR FUTURE EARNINGS. Eliot Spitzer makes a case for income-contingent student loans.

For too long we have asked students entering college and graduate school to choose one of two unappetizing options: pay astronomical tuition bills upfront or amass enormous debt that demands fixed, sky-high monthly payments the moment they graduate and enter the work force. These options serve as barriers to educational opportunity, since many cannot afford upfront tuition payments or qualify for the needed loans. That also distorts career choices, since for most the obligation to repay loans immediately has reduced the ability to choose socially desirable jobs such as teaching, forcing the pursuit of the highest-paying job regardless of personal or social utility.

When the feel-good stuff doesn't work, maybe it's time to think about policies that do work.

Yet there may be a "third way" that eliminates the educational financing problem. Milton Friedman first proposed the following idea, and James Tobin then refined and tried to effectuate it. If two Nobel laureates of decidedly differing worldviews agree, it must be worth at least a quick look.

The ensuing example is straight out of Capitalism and Freedom.

Instead of paying upfront or taking loans with repayment schedules unrelated to income, students would accept an obligation to pay a fixed percentage of their income for a specified period of time, regardless of the income level achieved.

The proposal is not perfect: the old Washington Monthly could regularly be counted on to grumble about physicians, individuals who generally don't share the income cohort of English Ph.D.s and early childhood teachers, defaulting on their student loans.

(Via Phi Beta Cons.)