Students at Purdue University soon will be able to apply for education funding in exchange for a percentage of their future earnings, a program that could revolutionize college financial aid at a time when costs are high.
Through its research foundation, the public college in West Lafayette, Ind. is rolling out the “Back a Boiler” program next month, using a concept known as an income-share agreement, or ISA, that would be available to rising juniors and seniors. Awards will start at $5,000 and will take into account a student’s cumulative debt. Students would repay the debt during the years immediately following college based on a fixed rate linked to their expected income, a gamble that could save them thousands of dollars as compared to traditional loans but also could cost them far more if they land high-paying jobs.
Purdue is the first American university to experiment with ISAs in more than 40 years, and if successful, could mainstream a novel alternative to private student loans.