Put ‘Boiler’ plan on back burner: Opposing view

Ben Miller discusses the issues with income share agreements and the cost of college on students.

The search for alternative ways to finance college is a laudable and understandable goal. With student debt surpassing $1.3 trillion nationally, it’s clear the postsecondary payment status quo isn’t tenable. But fixing this problem requires real reform of the factors that cause college to cost so much, not a niche financial product that will largely benefit the more affluent.

Proponents of a new debt instrument — called an “income share agreement” —like to say it’s not a loan. The underlying mechanics, however, are still the same. A student receives money upfront, and has to pay those funds back over time. All that’s different is how the payments are calculated. Instead of carrying a balance and an interest rate, borrowers have to repay a set percentage of their income for a period of years. The whole thing may sound friendlier, but failing to pay up will have consequences.

The above excerpt was originally published in USA Today. Click here to view the full article.

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