There are numerous things to make this proposal reasonable.

Count as income depending on amount of loan, nature of collateral, and usage of the loaned money.

A loan taken out against primary residence used for purchase of same residence under a million dollars? Not applicable. Proceeds used for education, within reasonable limits? Not applicable.

When a loan is taxed as income, provide for tax credits upon repayment reconcile ultimate use of “real” income. That way you avoid the “double tax” compliant they keep whining about.

I find the tax loans approach ultimately the most workable approach to close the loopholes.