New option to pay for college

Published Aug 3, 2018 at 4:00pm

Given the high costs, parents and students are always looking for an affordable option to pay for a college education.

That’s why a plan called an “income share agreement” is increasing in popularity.

Under the arrangement, colleges offer to pay a student’s tuition in exchange for the student’s agreement to pay the school a percentage of his or her future salary for a set period of time.

Purdue University was the first to adopt this arrangement, starting in 2016 with what it called its “Back a Boiler” program.

Purdue worked with Vemo Education, a Virginia-based company, to implement the program. Since signing up Purdue, Vemo has persuaded roughly 30 colleges and universities to follow Purdue’s lead.

This kind of program, obviously, is not suited for everyone. But it’s another option to consider, one that encourages universities to help students get good jobs once they graduate and, at the same time, reduces borrowing risks for students.

What’s interesting is that this new idea actually is quite old. It was first proposed by Nobel Prize-winning economist Milton Friedman in the 1950s.

The University of Chicago economist became widely recognized and praised for his insights into the operations of a free market.