Additionally, investors would likely vary the percentage of income they are asking for depending on a program's track record. This would give clear signals to students about what programs are likely to be most helpful to them when they enter the workforce. It would also help connect students with fields that are in demand and would put pressure on institutions to increase quality and lower costs.
While there are a few small companies experimenting with this idea, the lack of an established legal framework regarding consumer disclosures, tax treatment, and other important aspects of these plans has prevented the growth of this market. Therefore, we will soon be introducing legislation to provide this needed clarity so that a broad array of students can have access to this innovative financing option.
Read MoreRubio to offer bill on new education-financing vehicles
Lastly, Congress should pass legislation giving students and parents more information about the performance of graduates from different institutions and programs, empowering students to choose a program that will set them up for success. At the same time, we should look for ways to eliminate barriers that block new and innovative entrants that could shake up the system with new models designed for a 21st century student body and workforce.
There is no silver bullet for student-loan reform. However, by putting in place a streamlined and dynamic repayment system for federal loans, we can protect students and taxpayers from the disastrous financial consequences of default. And by pursuing other reforms that bring market forces and transparency to our higher education system, we can empower students and parents while helping to foster an education system that is more competitive, dynamic, and responsive to student needs.
With Congress set to consider reforms to our nation's higher education laws as early as this year, these ideas would be a good place to start fixing the way our people acquire the knowledge and skills to achieve their dreams in the 21st century.
Sen. Marco Rubio (R-Fla.) was elected to the U.S. Senate in 2010; his committee assignments currently include commerce, science and transportation; foreign relations; intelligence; and small business and entrepreneurship. Follow him on Twitter @marcorubio.
Rep. Tom Petri (R-Wis.) was elected to the U.S. House of Representatives in 1979; his current committee assignments include transportation and infrastructure and education and workforce.