• 27 mins Ford CEO Gets Raise After Massive Layoff Round
  • 16 hours Germany’s Flirtation With Recession Could Cripple The Global Economy
  • 22 hours Where To Look As Gold Miners Inch Higher
  • 2 days Google Faces Billions In Fines From European Regulators
  • 2 days The Energy Industry Has A Millennial Problem
  • 3 days Russian Banks Scramble For Sanction Loopholes
  • 3 days Gold ETFs Take A Hit After Four-Month Run
  • 4 days European Union Takes Aim At Ten New Tax Havens
  • 4 days Goldman Defends Trillion-Dollar Corporate Buyback Spree
  • 4 days $600 Billion At Risk As Boeing Fallout Continues
  • 4 days Venezuela Has Yet Another Crisis Developing
  • 5 days Wells Fargo Accused Of “Ongoing Lawlessness”
  • 5 days Hollywood Agency Returns $400M Investment To Saudi Wealth Fund
  • 5 days Why Twitter's CEO Is Backing A New Bitcoin Boom
  • 5 days U.S. Treasury To Employ “Extraordinary Measures” To Fend Off Default
  • 6 days Lobster, Golf Carts And Fidget Spinners: What’s In The Federal Budget?
  • 6 days Italy Launches New Welfare Experiment
  • 6 days There Is No Catch-All Solution To Climate Change
  • 6 days Is Now The Right TIme To Invest In Gold?
  • 7 days The Kremlin Moves To Control The Internet
Venezuela Has Yet Another Crisis Developing

Venezuela Has Yet Another Crisis Developing

As if things couldn’t get…

The Energy Industry Has A Millennial Problem

The Energy Industry Has A Millennial Problem

Talented millennials with science and…

  1. Home
  2. News
  3. Breaking News

Is This The Solution To The U.S. Student Debt Crisis?

College

Colleges are offering an alternative to students who don't want to be saddled with hefty student loans, or those who don't qualify; pay us a percentage of your future salary over a set period of time. 

Norwich University announced Tuesday that it will become the latest school to offer this type of contract, known as an income share agreement. Norwich’s program is starting out on a small scale, mainly for students who do not have access to other types of loans or those who are taking longer than the traditional eight semesters to finish their degree. -AP “Norwich University is committed to offering this new way to help pay for college in a way that aligns incentives and helps reduce financial barriers to degree completion,” said Lauren Wobby, the school’s chief financial officer and treasurer.

The income-sharing agreements are said to give colleges greater incentive to help students find high-earning jobs post-graduation, as they have a vested interest in seeing their students enter into high-paying jobs which means they would recoup their investment in a shorter period of time. 

For many students, income sharing agreements are considered less risky, especially if they are unable to find work after graduation, or end up in lower-paying jobs

Related: Google Wins Bragging Rights With New Subsea Cable

“Taking on the debt through a contract, where you don’t take on a debt per se but instead will repay a portion of your future income, has a certain appeal to students when the concept is fully explained to them,” said Clare McCann, the New America Foundation's deputy director for education policy.

That said, colleges providing income-share agrements will need to be careful that they don't appear to discriminate against those who choose lower-paying jobs. 

“If income share agreement providers aren’t careful, they can definitely see unintended consequences in discriminatory terms toward students. This is one of the biggest differences between income share agreements and federal student loans,” McCann said. “Federals loans offer the same terms to all borrowers.”

The notion of income sharing agreements has been around for over 60 years, however they began in earnest in 2015: 

Income share agreements were first proposed by Milton Friedman in 1955, and Yale University briefly experimented with the idea in the 1970s. In the past decade, technical training programs, such as coding boot camps, have used this type of funding largely because participants do not have access to federal student loans.

In 2015, Oakton, Virginia-based Vemo Education began working with accredited colleges and universities. The company now works with nearly 30 public and private colleges and universities across the country, including Norwich University. -AP

Vemo's first contract was with Purdue University, financing their "Back a Boiler" income sharing agreement program in 2016. 

“One of the biggest pros for the income share agreement was the fact that out-of-college pilots do not make a lot of money, especially looking at the costs for an educational program,” said Andrew Hoyler, 22, who graduated from Purdue last year with a degree in professional flight. He now works for American Airlines regional carrier, PSA airlines. 

Related: China’s Trail Of Unsustainable Debt

While the terms of the agreements can vary, Hoyler is currently paying 8% of his income to the program.

Hoyler took out federal loans but said the income share agreement helped him avoid working multiple jobs while starting out last year as a flight instructor. Hoyler said he may end up paying more for the income share agreement in the long run as his salary rises, but deemed it a worthy trade-off.

For students who can’t make ends meet with scholarships, grants and federal loans, income share agreements can meet that need for students who otherwise would turn to federal loans to parents or private loans. -AP

“The schools are doing it now because they want alternate financing models,” said Vemo CEO Tonio DeSorrento.

By Zerohedge.com 

More Top Reads From Safehaven.com

Back to homepage

Leave a comment

Leave a comment