Forget student loans, is speculating on future student income the future? And what could possibly go wrong?

Quartz writes:

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.


 
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