The government's hike in student loan repayment rates has highlighted one of the injustices of the scheme. Repayment kicks in at a mere $19,000 a year - substantially lower than the minimum wage (which is ~$26,000 a year for a full-time job). So graduates who have not benefited financially from their education (by for example being stuck in work which does not require their degree and is therefore remunerated as such) pay as if they had.
There's an obvious solution: progressive repayment rates. Australia does this, with repayments kicking in at 4% at A$49,000 and the rate increasing to 8% at A$91,000. We could do the same, with a stepped scheme with a low repayment rate at the current threshold, and rising sharply at higher incomes. This means that young families won't be squeezed by student loan repayments, but it also fulfils the scheme's underlying bargain: only those financially benefiting from their education pay for it.
