Could Income Share Agreements Solve The Student Loan Problem?

With the rate of both federal student loans and private student loans increasing, many are looking for another way to fund their education. For many, a debt free education is the ultimate goal. This is where income share agreements might work for students. Here, we will look at why income share agreements appear to be such a great option. We will also talk about what income share agreements offer, and political developments in the field.

The Real Issue

As mentioned above, the real issue here is the debt and loan repayment they face after college. Increasing tuition has meant that so many students have had to take out many federal student loans and private student loans. Even the government has noticed that this a real issue for students just out of college. The current economic situation and high unemployment rates have only worked to compound the problem. Because of this, students have looked for various options that can help them to lower the overall cost of education. They hope this can lower the cost of any future loan payments.

Why Income Share Agreements Offer a Real Solution

Income share agreements are a way to possibly provide debt free education. These agreements allow students to share stock in themselves. Investors simply invest in the students they believe to be the most promising. In return, these students agree to share a percentage of their income for a particular amount of time with these investors. In many cases, the cost to repay these sorts of investments would be much less than monthly loan payments for private student loans. In some cases, they could be even cheaper than payments for federal student loans. Income share agreements offer a real possible solution to the current student debt issue.

Recent Developments in this Field

Various companies, like Lumni, Pave, and Upstart are already offering students income share agreements. Recently, legislation has been introduced in the US to actually define exactly what these agreements constitute for students after college. It seems that these agreements can work for nearly anyone. It can also allow investors to fund the education of students with limited means and unlimited promise for the future. Finally, students can consider shopping for the best education, not just the best price, once again.

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