Did you know that students at Purdue had the highest average indebtedness of any university last year? That surprises me, but apparently it’s true. That has the university looking for financing alternatives and as we read in this Lafayette Journal-Courier story, school officials are interested in income share agreements.
The concept there is for investors to advance students the funds they need for college, then they recoup their investment through annual payments the student makes after he or she starts earning. I have always liked the idea because it puts market discipline into college finance. Instead of having the government lend money to anyone who wants to give college a try, people who have their own money at stake will only help students who seem serious and want to pursue a worthwhile course of study.
Purdue’s president, Mitch Daniels, is backing this move. It will be very interesting to see how this moves along and what arguments opponents use against it.