Purdue University says it is the first four-year institution in the country to offer the option, known as an income-sharing agreement, or ISA. Under Purdue’s Back a Boiler program, graduates make payments for 10 years after graduation. The percentage graduates pay depends on their major and the amount of funding they receive. The less they make, the less they are required to pay. And if they do not work, they do not pay anything.
“It gives them certainty and some protection and safety. They’re not going to have that much money borrowed, piling up, compound interest whether they’re doing well or not,” said Purdue President Mitch Daniels, who is a former Indiana governor and White House budget director under President George W. Bush.
On the flipside, there is a cap on the total payments if the student does well.
Charlotte Herbert, a 2017 graduate who got a job as a technical writer making about $32,000 per year, financed her senior year through the program. She is paying back about 10 percent of her income, which she said is a better deal than the loan payments she and her parents must make to cover her first three years.
The programs also do not tackle the underlying issue: that college tuition is rising at roughly twice the rate of inflation. While Purdue has managed to freeze tuition for seven years in a row, the average net cost of a four-year public university has risen 30 percent over the past 10 years, according to College Board.