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More Colleges Try Forgoing Tuition For A Percentage of Future Income (yahoo.com)
"Some innovative colleges, in partnership with private investors and a small number of philanthropies, are experimenting with a new financing model called 'income share agreements' or 'ISAs,'" reports Yahoo Finance:
With an ISA, instead of assuming a fixed debt obligation, students simply agree to pay an affordable percentage of their future income over a set time period, subject to an overall cap. High earners will have larger payments than low earners, but all will have an affordable payment, based on what they will actually be making. Importantly, when the college is providing some or all of the funding for the ISA, its return will be aligned with its students' post-college earnings, giving it economic incentives to make sure its students both graduate and find jobs. The college is, literally, invested in its students' success...
With ISAs, there is no principal or interest. Thus, they are much better suited for low income students as their financial obligations never exceed their ability to pay... In a recent paper commissioned by the Manhattan Institute, we looked at the small but growing number of colleges and universities offering ISA programs. Indiana's Purdue University launched the first such program in 2016. About a dozen other institutions have now followed suit, including Lackawanna College in Pennsylvania, Clarkson University in New York, and the University of Utah. Most of these pioneers offer ISAs to students as an alternative to non-subsidized federal loans, though a few are offering them as a complete substitute for borrowing... A common feature of all these ISA programs is that they require payments only when the graduate meets a certain income threshold. All impose time limits and caps on the total amount that needs to be repaid, though they differ widely in where they set those caps and limits.
With ISAs, there is no principal or interest. Thus, they are much better suited for low income students as their financial obligations never exceed their ability to pay... In a recent paper commissioned by the Manhattan Institute, we looked at the small but growing number of colleges and universities offering ISA programs. Indiana's Purdue University launched the first such program in 2016. About a dozen other institutions have now followed suit, including Lackawanna College in Pennsylvania, Clarkson University in New York, and the University of Utah. Most of these pioneers offer ISAs to students as an alternative to non-subsidized federal loans, though a few are offering them as a complete substitute for borrowing... A common feature of all these ISA programs is that they require payments only when the graduate meets a certain income threshold. All impose time limits and caps on the total amount that needs to be repaid, though they differ widely in where they set those caps and limits.
This article has a telling graph of how education has been moving out of reach for a large part of the US population
https://www.zerohedge.com/news...
While some technological things have become much cheaper the relative cost of education has increased manifold.
the student loan crisis is then just one aspect of this problem. It's the tip of the iceberg. I still see people focusing on the 'leeches' , people somehow abusing student loans. I'm sure that happens, but using such examples to represent the situation is entirely wrong. As is the solution which is presented in the article on here. The leeches are on the other side. They're the people getting rich off this.
It is bad as you said in the UK, but it is a different type of loan compared to this ISA. The ISA loan has fixed terms that has nothing to do with interest. The main term is to pay back at a certain percentage of the current annual income for a fixed period of time. As a result, the eligible amount loan will depend on the possible minimum annual salary after graduation from a selected program. There could be some more additional terms, such as the loaner may not need to pay back at all after not being able to find a job for a certain continuous period of time, there is a cap for the total pay back and the loaner can stop paying once the pay back hits the cap, etc.
Besides, the issue about going out of the country and not paying back is not likely to be in the U.S. Europeans can easily leave their home country and go to work in another European countries. As a result, these people don't pay taxes back to their home country (and not paying back the student loan because no income shows up in the home country). In the U.S., people simply move to another state. However, the loan system covers the whole nation, so it is not likely to be a major issue.
Your example is legit, but it doesn't apply to the type of loan (ISA) and the boundary in the U.S.