New way to pay for college has merits
Mounting student debt is a real problem in America.
It’s also a problem made more acute when a student graduates from college and can’t find a job in their chosen field. While they are in the hole tens of thousands of dollars, they have to resort to minimum-wage type jobs to generate any type of income at all, and such jobs cover only everyday living expenses and do nothing to reduce the debt.
That’s why a plan called an “income share agreement” is increasing in popularity.
Under the arrangement, colleges offer to pay a student’s tuition in exchange for the student’s agreement to pay the school a percentage of his or her future salary for a set period of time.
Purdue University was the first to adopt this arrangement in 2016. Since then, about 30 colleges have followed suit.
While it might not be a good deal for everyone, it can allow a student to complete their higher education without the constant pressure of cost. Once they are done, the expense doesn’t have to be paid back to the college until work is secured.
Traditional student-loan agreements call for paybacks to begin shortly after studies are completed and regardless of whether the graduate is working or not. That has proven to be a recipe for disaster for all too many.
The ideal situation is to complete college without owing a dime to anyone. But since that is out of reach for the majority, the sharing agreement is a more viable alternative than others that already exist.