As priorities shift in the minds of higher education leaders and students, it’s important to take stock of recent changes on the local and national levels. At the Martin Center, we have our eyes on some reforms at the top of our list for 2020:
Jenna A. Robinson, President
More Colleges Experimenting with Income Share Agreements
Student debt poses a problem for many young people, especially those who are underemployed or unemployed after leaving college. A better alternative is Income Share Agreements (ISA). ISAs are contracts between students and their schools. The university pays for the student’s education and the student, after graduation, agrees to repay the university with a certain percentage of his or her income for a pre-determined number of years after graduation.
ISAs have several advantages over traditional debt. First, students know exactly how long it will take to “pay off” their debt since that’s part of the agreement from the beginning. Also, students who don’t earn very much money in their first jobs won’t be crushed by sky-high loan repayments. And there’s also no interest, which means that the balance won’t grow over time.
Most importantly, ISAs align the interests of students and schools because the school recoups more of its investment from students who graduate and find lucrative employment. Universities and students both have a financial stake in student success.