Forget student loans, is speculating on future student income the future? And what could possibly go wrong?
No more student loans? Purdue University proposes selling shares of students’ future income
With student loan debt rising and the threat of new education models looming, Purdue University wants to offer a very different way for students to pay for school: private investors will fund their education, and get paid back as a portion of the students’ future income. It’s called an Income Share Agreement (ISA)—if students earn more than expected after university, they pay back more; if they earn less, they pay less.
It’s something that’s been available on the private market through startups like Pave and Lumni, and from some nonprofits. But Purdue would be a pioneer among major public universities if it actively offers ISAs as an option, which it’s aiming to do starting with students who matriculate in the spring of 2016.
It’s a pet project of Purdue president (and former governor of Indiana) Mitch Daniels, who testified in support of ISAs before the US Congress earlier this year.
“This no-debt, low-risk option is another way we can help keep our land-grant school within financial reach of all qualified students,” Daniels said in a press release. Students would be able to defer payment for years if they don’t reach a certain income threshold.
No more student loans? Purdue University proposes selling shares of students’ future income (Quartz)