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A paper released Tuesday by the Manhattan Institute proposes a federal income-share agreement that would extend students a single $50,000 line of credit.

Students would commit to paying back 1 percent of their income for every $10,000 of credit they draw down for 25 years. Jason Delisle, a resident fellow at the American Enterprise Institute and author of the proposal, argues that the ISA structure would mean student aid is not delivered in a regressive manner -- those who earn more would pay back more.

The concept of ISAs has increasingly caught on with a growing number of higher education institutions, and with lawmakers from both parties in Congress, although consumer groups have raised concerns about overly rosy rhetoric.

Some supporters of income-share agreements have argued that the contracts aren't debt and allow students to avoid accumulating interest on student loans. Delisle, however, writes that ISAs would impose an effective interest rate on a loan to students.

But instead of a standard interest rate for all students, borrowers would pay more based on what they earned. He also writes that collecting loan payments through the tax system would allow borrowers to avoid the annual certification process required for income-based repayment plans and wouldn't require the federal government to use student loan servicers to collect payments.

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