Wednesday, April 13, 2016

Some investors, universities see a return in fronting students’ tuition - Laura Pappano, Hechinger Report

Treating students like stocks is the idea behind an emerging kind of financial aid called income-share agreements, or ISAs. Under the concept, students get money from investors and they agree to pay a percentage of their future income to those investors over a set period of time. Given worrisome student loan debt — now $1.23 trillion — ISAs offer a new spin on college financing. Or new-ish. They have been used for years in Latin America. In the United States, they have long fascinated politicians and policy wonks, but with no record of returns or clarifying legislation, they have failed to attract investors. That may be about to change. In what would be the first big test here, Purdue University will decide next month if it will go ahead with a plan that could have 100 to 200 students adding ISAs to their financial aid packages this fall.

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