Purdue University Offers Students a New Way to Pay for College
Purdue University introduced its Back and Boiler program last year, in which about 240 juniors and seniors received $2 million to help pay for college. The program, which is an income sharing agreement, offers students a new way to pay for college.
Here’s how it works: The Purdue Research Foundation enters into an income share agreement with a student to help pay for part of their loans. In return, the student will agree to pay back a set percentage of their income every year for about 10 years after they are employed.
This arrangement can benefit students heading into careers where salaries tend to be smaller. Instead of paying a set amount of money they might struggle to afford, their monthly payment is tied to their income. Students also don’t accrue interest on the amount they borrowed, keeping costs low.
Of course, students who go into fields where the starting salary is higher might find they are paying back far more than the cost of the loan, a reason why Purdue caps repayment at 2.5 times the value of the loan. The university also provides students with a tool to see if the program would financially benefit them. Students can view a sample contract before they apply for the program, as well as a list of majors and their average salaries.
Students who are selected to enter into an income share agreement are not obligated to commit to any particular career or major, and have the complete freedom to chose where they want to work and what job they want to take.
One year in, the program has been successful enough for the university to expand it to all rising sophomores as well as rising junior and seniors.
“We have great confidence in the program, and many of the questions we received were really requests to expand the program to include more students,” said Brian Edelman, chief operating officer of the Purdue Research Foundation. “That is what we are doing.”
Although Purdue’s program is unique, that might not be the case for long. The university is working with Vemo Education to expand its income share agreement model to other colleges.