NATIONAL (NBC/KAIT) -America’s student loan debt is climbing, but one university shared the details of their alternative to student loans.
Purdue offered another possibility to student loans. Students can instead pay about 7 percent of their income for ten years after they graduate.
“If I had gone with the traditional loan, I would have had to pay it all off and who knows how long that would’ve taken?” Pardue University student Savannah Williams said.
It’s called an 'income sharing agreement’ and is the latest attempt to tackle America’s college debt crisis, which equals a one-point-six trillion dollar drag on the economy.
It can affect people’s ability to buy a home, car or start a family for years after graduation.
Purdue President Mitch Daniels said the program has shifted the risk away from the student. It’s now in its third year.
“It gives them certainty,” Daniels said. “And some protection and safety, they’re not gonna have that much money borrowed.”
If the graduate doesn’t work, they don’t pay. If he or she does really well, their total payments are capped.
It’s too soon to tell if income sharing will be the way everyone pays for college in the future.
The programs are unregulated so far and still leave graduates with an obligation. However, officials said this is one way some schools are trying to bend the curve of the price of admission.
Purdue officials said the university is the first four-year university to offer the program, but other colleges and learning facilities are catching on quickly. Experts estimated nearly 96% of students borrow money to attend for-profit universities around the country each year.