Students: forget about those pricey student loans! Now you can pay for college by pledging shares of future income. Wow, what could possibly go wrong with that? Former Indiana governor and Purdue President Mitch Daniels thinks Income Share Agreements are a swell idea and the university will be offering them soon.
His hype is almost comical, pretending such loans are low-risk. Inquiring minds want to know, does Purdue get a cut of those future earnings?
“This no-debt, low-risk option is another way we can help keep our land-grant school within financial reach of all qualified students,” Daniels said in a press release. Students would be able to defer payment for years if they don’t reach a certain income threshold.
Low-risk? But what happens if you defer for a few years? Do Wall Street vultures then take a large percentage of your income? What if you’re still flipping burgers after several years and are under the income threshold. I’m guessing the jackals will come after you anyway. Especially since there are no rules yet.
There is legislation pending in Congress that would build a regulatory framework around the idea. The bill would set caps on things like the percentage of income collected and the time frame of the agreements.
Thus, there are no such regulations now, no caps, nothing to protect the gullible student. And Purdue wants offer them anyway. If this wretched idea catches on, greedhead banksters will undoubtedly securitize the income streams, leading to future financial disasters. And if students find their lives ruined because of such agreement, oh well, that’s no concern of the bankers or universities.