Higher ed discussion grows as universities experiment with tuition payment

Higher education is seeing an increase in reform ideas, especially as universities experiment with alternative policies and Democratic presidential hopefuls express their policy goals. But with new programs being rolled out in schools across the country, UNC is holding off on some new strategies as politicians at all levels criticize them.

In 2016, Purdue University established their income share agreement, or ISA, fund, “Back a Boiler.” The fund offers students education funding in exchange for a certain percentage of their income after graduation for a defined number of years.

Purdue treats the ISA the same way as a private loan, according to the fund’s FAQ website. Students eligible for the fund could see a maximum aid package that subtracts other financial assistance from the cost of attendance. 

Mary-Claire Cartwright, vice president of information technology and program manager for Back a Boiler at Purdue, said students who come and evaluate can make the decision on whether it’s the right product for them. 

“Not everybody is going to need to make use of it, but those that do, it’s there for them,” she said.

Kate Luck, a spokesperson for UNC, said the University doesn’t have any plans to implement any type of income share agreement. She went on to say UNC practices need-blind admissions and provides low-debt, full-need student aid.

Even without ISA programs available, researchers at the Institute for Higher Education Policy found UNC was one of only four state flagship universities to be affordable for low-income students, and one of only three to be affordable for independent students with dependents.

Kathryn Gimborys, a spokesperson for IHEP, said this result comes from the relatively low cost of attendance and need-focused policies such as the Carolina Covenant program.

The University of Virginia was the only school in the study researchers found to be affordable for middle income students.

“Sadly, all of these schools tended to be the least accessible,” the study found. “No school in our analysis was both affordable and accessible, as measured by the percentage of Pell students enrolled.”

Purdue has argued the ISA offers an alternative to debt, as ISA payments adjust based on the level of income the student has after graduation, whereas debt payments do not. Payments to Purdue’s ISA fund also do not accrue interest. Students are not required to pay the full amount given to them, just the defined rate for the defined time.

Another aspect Purdue offers as a defining difference is the ability to pause ISA payments for up to five years if a student decides to pursue other paths, such as further their education, travel or start a family.

U.S. Sen. Elizabeth Warren, D-M.A., and U.S. Rep. Ayanna Pressley, D-M.A. and Rep. Katie Porter, D-C.A., sent letters to Purdue and 6 other institutions to learn more about the schools' ISA programs and what steps they have taken to ensure the best interest of their students.

“We are concerned about ISAs because, like private student loans and many other types of debt, the terms of ISA contracts can be predatory and dangerous for students, and ISAs have received little federal oversight,” the letter said. “ISAs carry many common pitfalls of traditional private student loans — with the added danger of opaque terms and conditions that allow deceptive rhetoric that can obscure their true nature.”

Warren, Pressley and Porter also sent a letter to Secretary of Education Betsy DeVos to express their concern with ISAs. The letter to DeVos said the senator and members of Congress were writing in response to comments made by Diane Auer Jones, the principal deputy under secretary at the Department of Education, at an education summit. 

At the summit, Jones revealed the department is considering how to use federal programs to experiment with ISAs and expressed a departmental appreciation for them. Opponents say the program would cost students more than the especially "burdensome, predatory and costly private student loans." The contract for the ISA does not specify an exact number, but it does hold the applicant responsible for all legal fees associated with default.

The letter to DeVos also included requests from the department for specific details on experimentation with ISAs and any analysis done by the department’s Office of General Counsel and Office of Civil Rights.

Cartwright said Purdue is making efforts to keep costs low alongside the income share agreements. She also said Warren’s plans for education are different than what Purdue is pursuing since this is not free education.

“This is something where Purdue is putting skin in the game and transferring the risk to the university off of the students,” she said.

@CBlakeWeaver

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