"Purdue University has paused new enrollments in its income-share agreement program, a financing mechanism both praised as a bold experiment to make college more accessible and criticized as a predatory scheme that traps students in dodgy and expensive contracts," Inside Higher Ed reports.

..."When Purdue jumped into the ISA marketplace some six years ago it was—and arguably still is—the biggest name to do so. The fact that it has now hit pause has prompted some higher ed observers to question the marketplace potential for such agreements.

Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators, noted that despite the attention ISA programs receive, there are relatively few nationwide. Though many colleges have expressed interest, few have entered the marketplace.

'For most schools, I think they looked at income-share agreements as experimental,' Draeger said, adding that many questions remain about the efficacy of ISAs—including student outcomes, such as how graduates are navigating repayment and how low-income borrowers fare in such arrangements."

..."Regardless of what the future holds for ISAs, experts suggest there is an appetite for alternative college financing mechanisms, in part because the current financial aid system is flawed. And when consumers have a bad experience, they’ll ultimately look elsewhere for better products.

'The entire reason income-share agreements even had a wedge into the student loan marketplace is because of the dissatisfaction by students, parents and schools, for that matter, with our current federal student loan system. I’m not one of the people that sees ISAs as evil. I don’t necessarily see them as good. I see them as a reality and a market-based response to the general malaise and dissatisfaction people feel with our current education financing system,' Draeger said."

NASFAA's "Notable Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Articles included under the notable headlines section are not written by NASFAA, but rather by external sources. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

Publication Date: 6/23/2022