By Joseph Paul
Bet on a Boiler. Income share agreements. Indentured servitude.
Call it what you will, but Purdue University is rethinking financial aid after the nation’s class of 2015 was named the most indebted in United States history. Purdue Research Foundation announced last week it would seek a partner firm to establish and manage income share agreements — an alternative to federal loans that rack up student debt.
The agreement works like this: A student draws from an investment pool to cover tuition; in exchange, the student forfeits a percentage of his or her income after graduation over a fixed period of time. Rather than accrue interest, payments adjust with the graduate’s income over the life of the contract and stop when the contract expires, regardless of how much was paid back.