From DSC:
The article below caused me to reflect on the idea of using Income Share Agreements (ISAs) as a way for students to get through college these days. Although I appreciate that others are trying to help students get through college — an admirable goal for sure and one that I wholeheartedly share — I don’t like the means/method being proposed here. Why? Because I’m concerned that ISAs don’t offer any incentives for colleges and universities to lower their prices in the first place. The burden of debt is just spread out into the future. In fact, one could easily imagine the costs of obtaining a degree to continue to increase, because the immediate impact of the debt isn’t felt right now…it’s spread out over one’s future. The problem becomes invisible again, making it once again easy for those working within higher education to ignore.
So I hope this method doesn’t take off (as I understand it); instead, I hope that we can figure out better ways to reduce the price of obtaining a degree. Technology should be of use here.
Students Get Tuition Aid for a Piece of Their Future — from wsj.com by Jillian Berman
Income share agreements seem poised to take off, as costs and debt loads rise
Excerpt:
To help pay for ever-growing college costs, more students may soon be trying a new approach: selling rights to their future earnings.
Long discussed in college policy and financing circles, income share agreements, or ISAs, are poised to become more mainstream. A handful of backers currently exist that in effect have invested in college students’ futures by advancing them thousands of dollars in tuition money to bridge gaps in financing when student loans don’t quite meet all of their expenses.
Under the terms of a typical ISA, students agree to pay a percentage of their future earnings for a predetermined period in exchange for help up front with their tuition. Now, more students may have the opportunity to enter such deals, as lawmakers in Congress are working on possible ground rules for the agreements.