At a 100K salary, over 24 years you would pay 72K. The same cost of 72K as a loan at 6.8% paid over 24 years would amount to $146,229.96 with total interest paid of $74,229.96
That's more interest than the cost of the loan. You would have to average more than 203K a year in salary in order for this to be the wrong choice. The average student isn't going to come close to that. Do you really expect that you'll be making more than an average of 203K over the next 24 years?
I used 100K as an example showing even if you made that much a year 3% would still only be 72K over the 24 years. If you were only making 35K a year, say as a teacher, 100K in student loans would take a LONG time to pay off. With this program someone making 35K would only pay back a little over 25K into the program.
Depends on the interest rate of the loan. No reason to pay it off early if you've got a 1-2% loan - you'd be better off in the long term investing that 'extra' money and getting 3-5% return.
Where are you going to get a 1-2% student loan as an 18 year old with no credit or assets (or anyone else, really)? Government loans are 6.8% right now.
I used 100K as an example that even at that high of an income $3,000 a year only adds up to 72K. If you make 50K salary for 24 years you're still only paying 36K for your education. The program stats "students would pay 3 percent of their paycheck back for 24 years in order to help fund the program for future students".
With the direction higher education costs are moving, this could be a very inviting choice for those who would pay for college with student loans.
The problem here is that it is obvious there are a lot of students that would not be able to pay current tuition from their earnings. If there were none, current loan system would work perfectly. So there will be subsidizing. It works only if you dont know in which category you will fall - like with insurance. Once you know on which side of the equation you are - you will have definite incentives to either maximize or minimize use of this system, and this will make it unbalanced and unsustainable in the long run, since potential high earners would try to avid it - they have no upside there - and potential free riders would flock to it.
That's more interest than the cost of the loan. You would have to average more than 203K a year in salary in order for this to be the wrong choice. The average student isn't going to come close to that. Do you really expect that you'll be making more than an average of 203K over the next 24 years?