Hoyler, who also has federal student loans, says the ISA has been “more streamlined and easy to understand.” He also has peace of mind knowing that he can afford payments even with entry-level pilot wages.
But income-share agreements aren’t right for everyone.
Depending on the terms of the agreement, high-earners could end up paying far more than the amount they received and more than they would have with a student loan. Students can use Purdue’s Back a Boiler comparison tool to weigh the costs of an ISA against private student loans and parent PLUS loans. Indiana University Student loan borrowing at Indiana University has dropped 19% across all IU campuses from the 2011- 12 school year to 2017-18, according to the university. During that period, the administration has implemented a suite of resources and programs to reduce borrowing. 3 Most prominently, the university began sending annual letters informing students of the amount they’ve borrowed and their estimated future monthly loan payments. Since then, states including Indiana, Nebraska and Florida have passed laws requiring colleges and universities to disclose similar information to federal student loan borrowers annually. “This is a personalized summary of your estimated current student loan indebtedness,” a letter might begin.
A student would then find details such as:
• Total education loans: $25,000
• Assumed interest rate: 6.80%
• Monthly payment: $287
• Cumulative payments: $34,524
• Projected interest paid: $9,524
The debt letters were one piece of a larger initiative to reduce borrowing; it’s not clear that the debt letters alone caused Indiana University’s student borrowing reduction, according to a 2017 independent report published through Brookings Economic Studies program. The initiative also includes the university’s MoneySmarts program, which offers financial literacy education and tools, one-on-one consultations, and for-credit personal finance courses.
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