Selling shares of students’ future income for college financing.

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.

Proponents of ISAs (paywall) believe they are the future of education financing—although they have a long theoretical history. Economist Milton Friedman laid out the basics in a 1954 book. ISA boosters argue that the current system of student loans can be unnecessarily burdensome, and contributes to the ever-rising cost of an education. ISAs, they argue, have the potential to be fairer for students, and reduce the price of education over time. Ultimately, ISAs could enable students to take bigger career risks.

Source.

Ayn Rand would approve....

Indentured servitude says I knew you would come crawling back to me.

lol that sounds terrible. It's basically just a loan with variable payments depending on how much you make. I think the UK has something similar. This is only being peddled because it will benefit private investors.

Yeah that sounds suspect. Can I collect my investment back in lap dances instead?

the value of education isn't simply in what the financial return may be for it

Wow, that sounds awful.

Sounds like it would lower the popularity of degrees like Philosophy and MFA programs, where earning enough money to pay back your investors might take a long time.

Sounds worse than a loan.

I think making universities and colleges tuition free (not room and board or books) through a speculation tax on wall street would be a better idea.

Not sure what Ayn Rand has to do with this... considering her philosophy wouldn't have people taking loans for education at all, and earning their way into school based on sheer merit of their ability.

As for comparing this to a traditional loan, it makes a little bit more sense, considering that a loan you pay interest, and with this, you'd not be charged interest (I assume) and are somewhat forced to pay it back (making it a decent investment for those giving money into it).

I personally have my current career because of a system similar to this. Trucking companies pay into the Manitoba Public Insurance program, that takes qualified students and pays for their entire training course and mentorship. The costs only have to be paid back if the student leaves after the first two years, or moves to a company not part of the program.

Oh, you Americans and your insane educational system.

We should make college shorter and more efficient with mentorship. Then you can look at students as potential employees.