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Purdue Experiments With Income-Contingent Student Loans
HughPickens.com writes: Danielle Douglas-Gabriel writes in the Washington Post that Purdue University is partnering with Vemo Education, a Reston-based financial services firm, to create income-share agreements, or ISAs, that its students can tap to pay for tuition, room and board. In return, students would pay a percentage of their earnings after graduation for a set number of years, replenishing the fund for future investments. Purdue president Mitch Daniels calls the contracts a constructive addition to today's government loan programs and perhaps the only option for students and families who have low credit ratings and extra financial need. "From the student's standpoint, ISAs assure a manageable payback amount, never more than the agreed portion of their incomes. Best of all, they shift the risk of career shortcomings from student to investor: If the graduate earns less than expected, it is the investors who are disappointed; if the student decides to go off to find himself in Nepal instead of working, the loss is entirely on the funding providers, who will presumably price that risk accordingly when offering their terms. This is true "debt-free" college."
However some observers worry that students pursuing profitable degrees in engineering or business would get better repayment terms than those studying to become nurses or teachers. "Income share agreements have the potential to create another option for students looking to pay for college while seeking assurances they will not be overwhelmed by future payments," says Robert Kelchen. "However, given the current generosity of federal income-based repayment programs and the likely hesitation of those who expect six-figure salaries to sign away a percentage of their income for years to come, the market for these programs may be somewhat limited."
However some observers worry that students pursuing profitable degrees in engineering or business would get better repayment terms than those studying to become nurses or teachers. "Income share agreements have the potential to create another option for students looking to pay for college while seeking assurances they will not be overwhelmed by future payments," says Robert Kelchen. "However, given the current generosity of federal income-based repayment programs and the likely hesitation of those who expect six-figure salaries to sign away a percentage of their income for years to come, the market for these programs may be somewhat limited."
Someone has to pay for the Liberal Arts majors to hike through Nepal.
Really, what this is going to do is encourage people to get degrees with no marketable value, then wait out the repayment period. Sounds perfect for the "but I'm entitled to a free degree" crowd. Like everything else that is free, this is going to get real expensive, real quick,
Meanwhile, other countries offer free (as in beer) University / College tuition to all students who qualify academically. Maybe if they didn't piss so much money up against the walls of their sporting facilities - and did their job of imparting knowledge to future engineers, scientists, etc, and not service as a training ground for the professional sporting organizations, they might have more money for their academic function.
..what this is going to do is encourage people to get degrees with no marketable value,
What's marketable today doesn't necessarily mean it's marketable in four years. Electrical engineers have a horrible job market now as well as petroleum engineers. When I was in school, a math degree was worth as much as an English degree - all you could do with it was teach. Unless of course you were smart enough to get into actuarial or you minored in CS. Now it means something because unbeknownst to us, it became marketable 10 years later.
Education used to be about bettering oneself. To expanding ones mind and being a better citizen and bettering society. Now, it's nothing but vocational training. Business, engineering, computer science is just vocational training - it's not an education. I learned more about logic and critical thinking in my one Philosophy class than I ever did in any of my Math or CS classes.
And the trend now is to send STEM work overseas ,as well as accounting, law and even some medical.
Ted Turner was pressed by his dad to go to business school. He rejected that idea because he was to learn to lead and not manage. So, he studied the Classics. Study people like Alexander the Great. He took his father's little billboard company and Ted became a billionaire. He made a "worthless" degree work for him.
My point is that training for something marketable at least at the college level is pretty risky. And with employers demanding that people be passionate in what they do, it's kind of hard faking that when you did what you did just to get a job. And if you got the job, you'll be miserable since you're going to be doing it 55+ hours a week 52 weeks a year - vacation? (HA! Try to take it!)
Instead of indebting our next generation that is gonna create wealth for the country, or make deals so rich people can leech cash from whatever the next generation is gonna make after graduating, How about just make education free? I know. Crazy Commie talk!!