
For anyone facing the prospect of sending a child to college, there are many things to consider. You’ll no doubt be assisting in reviewing school choices and finding out as much as possible about programs of interest. There are environmental factors to consider, geographic factors, and admission factors as well. But perhaps the most daunting thing you have to weigh when making a decision is the cost.
With student loans ballooning out of control and school cost continuing to rise, it can be a heavy burden for families, and it is not an easy decision for a young person to take on such debt if mom and dad can’t cover the cost. Fortunately, there are hopefully some smart alternatives that are on the horizon, and one is the “Back a Boiler” program.
Back a Boiler
Back a Boiler is the Purdue University income share agreement program that offers an alternative to Federal Parent PLUS and Private Student Loans. With an income share agreement, students agree to pay a percentage of their post-graduation income rather than a normal interest-driven student loan.
Indiana Senator Todd Young has introduced bipartisan legislation that might make this program a nationally available option for students.
For governmental leaders who are scrambling to find ways to make higher education affordable as well as to eliminate predatory lending and an epidemic of student loan debt, this is a creative way to give accountability both to students and to schools. It can help limit schools from pushing degree paths that are unmarketable, and puts the onus on them to help students prepare themselves to join the workforce. It does this, because its financial wellbeing depends on its graduates going out and finding jobs that allow the school to be repaid.
With an income share agreement, students are betting on themselves, and schools are partnering with them on that bet. The program was the first of its kind in a major public school, and with legislators looking for innovative solutions, it seems likely that it won’t be the last.
When weighing school selection options, it is a good idea to ask admission offices about income share agreements. You may not think you’ll need the option, but many times student loans happen because a life change while in school results in a need to take out a loan. Having the option of an income share agreement could be what allows you or your student to avoid adding a sizable student loan debt while still being able to complete school in a timely manner.
At the Money Coaches, we don’t endorse attending any university in particular, but wanted to highlight a very interesting and innovative practice being pioneered by Purdue. It is something very worth looking into.