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How ISAs Are Taking Strain Of Student Loan Debts Off Graduates | Sunday TODAY - YouTube
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the most recent statistics from the
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federal reserve's show in the United
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States nearly 45 million borrowers owe
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1.5 trillion dollars on student loans
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student loan debt is now larger than
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both credit card and auto loan debt and
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second only to mortgage debt in this
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country the numbers are staggering and
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they threaten the future of a generation
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stuck under the weight of its loans now
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one major university is leading the way
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with a plan that eases the burden of
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tuition by taking a cut of its students
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future dr. burns of our streaming
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service NBC News now as our Sunday
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spotlight America is a betting land from
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Wall Street to the playing field but
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what about betting on the next
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generation around my junior year that
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was when that savings account dried up
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and my parents could not make up for
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that difference
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Paul Aurora is graduating from Purdue
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University this weekend but that almost
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didn't happen
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my parents were saying that I might have
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to take a semester off and just work and
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save up that money that's needed Paul's
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problem is not unique but Purdue's
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solution is it was the first major
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public university to give students a new
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way to finance their education the idea
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is called an income share agreement or
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an ISA here's how it works
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a student's tuition is paid for in
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exchange for a percentage of their
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future income there's no interest there
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is a set end date and a spending cap and
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while you're out of a job
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you don't pay essentially students sell
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a stake in themselves to investors while
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investors make a bet that these students
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will succeed after college it's not
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necessarily a loan but it's more so a
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partnership between you and the
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University do you feel like you yourself
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are an investment they're hoping that
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I'm gonna leave here and grow and then
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return on that investment and I hope the
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investment pays off because I've mean
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that mean great stuff for me in the u.s.
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the growth of student loan debt is
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actually outpacing wage growth Purdue
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president mitch Daniels wants
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change that the real question was would
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there be demand for turned out there was
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right now the student is the person who
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assumes most of the risk that's exactly
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right they can rather quickly get in a
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hole if their career does not start off
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in a and a good-paying job in an is a
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that risk is entirely shifted it's also
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a way for the investors which is not our
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case includes the university to take
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accountability
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this is Purdue putting some skin in the
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game absolutely Chris rich Rd is the
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co-founder of Ed Lee a marketplace for
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ISAs we bring together schools on the
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one hand and investors on the other hand
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to come together to finance ISAs from
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the investor perspective is this a good
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cause or is it good business I think
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it's both we can see that the returns
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look good but we also know that we're
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solving a big problem but how does this
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actually play out for students after
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graduation
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you borrowed 27,000 yes I'm expected to
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pay my income share which for me is 10%
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back for 104 months Charlotte Herbert
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graduated from Purdue in 2017 she funded
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three years with student loans until the
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is a program launched her senior year
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how did the to compare the is a is
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designed to take individuals
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circumstance into account while a
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standard loan doesn't care but one thing
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this doesn't address the massive cost of
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education do you worry that it's sort of
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a bandaid on the bigger problem yes and
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no something like this takes the strain
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off of the students while the
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universities the government can think
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about is there a better way and that
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seems like a pretty fair bet for Sunday
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today dasha burns West Lafayette Indiana
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[Music]
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