Why One University Is Sharing the Risk on Student Debt
Most student financial aid for higher education comes in two forms: loans and grants. As tuition costs have grown, however, both options have had a hard time keeping up—grants are oversubscribed and loans have left college dropouts struggling to pay off debts without any of the financial benefits of holding a degree.
Mitch Daniels, the president of Purdue University and the former governor of Indiana, has been watching this storm brew for years. Since taking over Purdue in 2013, he’s instituted tuition freezes, lowered room and board costs, and partnered with Amazon to reduce textbook costs for students. In his four-year tenure, he’s cut student borrowing by 23 percent, and he’s not done yet: “We continue to look for every way that we could send our graduates out with lower debt obligations,” he explained.
Now, Purdue is experimenting with an alternative form of financial aid called an “income-share agreement” (ISA). ISAs provide students money 4.39 percent of her income over 100 months, up to a maximum of $32,500.
