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In recent weeks two private institutions have joined the small but growing list of colleges that give students the option of using some of their postgraduate income to help pay for college.
Late last month Lackawanna College, which is located in Scranton, Pa., announced the creation of its income-sharing agreement. Clarkson University, located in Potsdam, N.Y., this week issued a similar announcement. Under the two programs, students would pay a set amount of their wages after graduation for an agreed-upon number of years in exchange for having some of their tuition waived. The two private institutions teamed up with Vemo Education, a technology company, to help design and launch their programs. Vemo said in November that it has been involved in $23 million of such agreements this year.
"Income-share agreements (ISAs) offer students an alternative to debt. Whereas loans create substantial risks for students if they cannot afford payments during and after college, ISA payments adjust according to levels of income," Clarkson University's statement said. "In addition, there is a minimum income threshold and a maximum payment cap, so students who use the program will not pay if they do not meet a minimum income level, and those who earn a substantial income will not pay more than a certain maximum amount."
The most high-profile player in higher education to try income sharing is Purdue University, which last year began its "Back a Boiler" ISA fund. Purdue in April said its research foundation had distributed $2 million to roughly 160 students under the program, which the university is expanding.
While ISAs have generated excitement as a possible solution to the rising price of attending college, some have criticized the agreements, even comparing them to indentured servitude.
