Elida Gonzalez feared drowning in college debt on her road to a middle-class job, so instead she sold investors a piece of her future.
The now-23-year-old daughter of a farm worker from Santa Maria, Calif., signed up with 13th Avenue Funding, borrowing $15,000 to complete her bachelor’s degree at the University of California, Santa Cruz. The Sacramento-based nonprofit group agreed to fund her college expenses in exchange for a share of her future earnings in an arrangement called an income-share agreement.
“I was able to trust them, which is really hard for me to do,” said Ms. Gonzalez, who could pay back more than the cost of a traditional loan if she does well, but is on the hook for only 5% of her income for 15 years if she doesn’t. Repayments don’t kick in until she makes at least $18,000 a year.