Income Share Alternatives To Student Loans Could Reduce Graduate Debt

HUNTSVILLE, Ala. (WHNT) – If you are out of college and still paying off student loans, you’re not alone. Student loan debt in America has ballooned to more than a trillion dollars.

But what if you could avoid the debt and find someone to literally invest in your academic success?

Senators Marco Rubio and Tom Petri have introduced a bill called the Investing in Student Success Act. The bill would strengthen income-sharing laws, meaning investors can lend students a lump some of money to pay for their education, in exchange for a percentage of that person’s future income, paid back over a fixed period of time.

Since the payments are based on a fixed percentage of the graduate’s income, the agreement takes pressure of college graduates who face an extended job search or end up making less in their first job than anticipated.

A handful of new businesses are already doing this. Lumni offers to finance education based on a person’s potential. Upstart lets students pitch themselves to a marketplace of backers in hopes of retiring their student debt.

It is a fairly new idea, but if met with enthusiasm, supporters believe it could help drastically cut the nations’ growing student loan debt.

 

 



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