Imagine paying for college based on your future earnings. Imagine coming out of college with almost no debt, and your university financing your education. For Purdue University students, this is becoming a reality.
A few weeks ago, Purdue University introduced a new program to finance college. Students earn funds to put toward their tuitions, which they pay back over time based on their projected post-graduate incomes. Purdue is the first American university to offer an income-share program – some private companies already offer similar deals.
GW should get on board with an income-share program. GW’s cost of attendance is already one of the highest in the country. If students could use an alternative or additional funding option, a GW education would be more accessible and affordable.
In Purdue’s model, students receive funds based on their majors and their projected salaries. After graduation, students pay during a standardized repayment term of up to nine years, which ends on a given date, even if students have not completely paid off what their educations cost. Besides the possibility of never paying back loans fully, students don’t have to worry about accruing interest on their loans.
Currently, students can end up paying back federal income-driven loans for as many as 25 years. GW offers various federal and private loans, which place bigger burdens on students and can increase costs, while income-share programs are much more manageable to repay.
Implementing this type of loan as an alternate financial package for students would help different types of students access a GW education. GW’s recent test optional policy, as well as officials’ decision to increase the total financial aid pool by 6.5 percent, aligns with its focus on diversifying the student body and increasing accessibility.
University spokeswoman Maralee Csellar said that GW plans to continue its fixed tuition plan. The plan locks in an undergraduate’s tuition for a five year period.
While fixed tuition ensures students will not have to pay more every year, it doesn’t always make paying for GW more manageable.
As an international student, I wouldn’t have the opportunity to enroll in an income-share program and might end up graduating with higher debt. However, through this program, my friends and other students could graduate college debt-free, or at least with a lower debt. As someone who won’t have the chance to do so, I recognize how much of a benefit it can be for my classmates to start life after graduation without debt hanging over their heads.
Jennifer Delaney, a professor of education policy at the University of Illinois Urbana-Champaign who researches income-share agreements, said most policies assume that high earners will pay more back into the program, which is why they work. Receiving more money from high earners allows the program to subsidize costs for low earners.
“For individuals who might not otherwise be able to attend college and that need money, having the ability to sign up for an income-share agreement is vital and is often the difference between going to college or not,” Delaney said.
While I wish I could say that Purdue’s program is perfect, some experts say it still needs refining. Sandy Baum, a professor of higher education administration in the Graduate School of Education and Human Development, believes that students who have high potential earnings end up paying more money in an income-share program than they would have paid on a traditional loan option.
“People who think they will have higher earnings won’t participate and this will raise the cost for others”, she said.
Even if it isn’t perfect, Purdue’s program is definitely a step toward increasing the accessibility and affordability of a college education. This program could be a great way to attract future GW students and lower the amount of debt for students once they graduate. Students should have the chance to study what they want, where they want, without worrying about the cost.
Shwetha Srinivasan, a sophomore double majoring in international affairs and economics, is a Hatchet opinions writer. Want to respond to this piece? Submit a letter to the editor.