Income share agreements reflect reality

With student debt over $1.5 trillion and growing, it’s time to consider Income share agreements (“What’s Scarier Than Student Loans? Welcome to the World of Subprime Children,” The New York Times, May 1).  Students promise a share of their future earnings in exchange for cash.  It is not a loan, since a graduate who earns nothing owes nothing.

There’s no set amount to pay back, and repayments typically don’t begin until graduates make at least $18,000 a year.  Moreover, the more they make, the more their school gets – and conversely.  As a result, graduates are free to pursue any jobs they wish without fear that they will fall in arrears. Purdue University, which began the program in 2016, has made the arrangement even more attractive by capping repayments at 2.5 times the value of the contract.

I realize that the value of a college major should not be measured solely by its monetary return.  But I don’t know any college graduate without a trust fund who isn’t concerned about earnings.  After all, how are they going to pay the rent and still have any discretionary income at the end of the month?  If the Higher Education Act is revised, it will provide greater feedback to students about which majors their schools offer are likely to pay them the highest salaries.

Commencements speakers like to exhort graduates to follow their passion, rarely engaging in anything but platitudes.  Yet in the final analysis, college students need to get real about their employment prospects.  That’s why more and more students are shunning majors that do not lead to a decent salary and benefits.

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