Colleges explore alternatives to student loans - YouTube

ADRIENNE: THE STUDENT LOAN CRISIS.

$1.5 TRILLION AND COUNTING.

I’M ADRIENNE PEDERSEN.

TODAY, ON "UPFRONT," A FIRST OF its kind program IN WISCONSIN OFFERING AN ALTERNATIVE TO TRADITIONAL STUDENT LOANS.

WE’LL LOOK AT INCOME SHARE AGREEMENTS AND SEE HOW THEY CAN HELP STUDENTS, AND THE BROADER ECONOMY.

PLUS, REPUBLICAN LAWMAKERS SEND GOVERNOR EVERS THEIR PLAN FOR STATE SPENDING.

WHAT INSIDERS THINK HE’LL DO WITH IT.

AND, WHY A GROUP OF INFLUENTIAL U.W. MADISON BACKERS SAY IT’S TIME FOR THE TUITION FREEZE, TO THAW.

Announcer: taking on the issues important to Wisconsin, this is "upfront" with Adrienne Pedersen.

ADRIENNE: THANKS FOR JOINING US TODAY.

I’M ADRIENNE PEDERSEN AND THIS IS "UPFRONT." WILL HE OR WON’T HE?

WILL DEMOCRATIC GOVERNOR EVERS SIGN OR VETO THE STATE SPENDING PLAN REPUBLICANS HAVE SENT HIM?

OR IS THERE ANOTHER OPTION?

I’LL ASK OUR STATE CAPITOL CORRESPONDENT LATER IN OUR PROGRAM.

BUT WE BEGIN TODAY WITH A NEW IDEA TO ADDRESS THE STUDENT LOAN CRISIS.

AND IT IS A CRISIS.

IN 2019, STUDENT LOAN DEBT HAS REACHED A PEAK, MORE THAN 44 MILLION BORROWERS OWE $1.5 TRILLION.

IT’S THE SECOND HIGHEST CONSUMER DEBT CATEGORY.

MATT SMITH REPORTS ON AN EXPERIMENT IN WISCONSIN THAT SOME SAY COULD CHANGE THE WAY STUDENTS PAY FOR HIGHER EDUCATION.

>> WE CHECK TO SEE IF VALUE MODULES TWO IS NOT EQUAL TO ZERO.

MATT: IN MILWAUKEE’S HISTORIC Third Ward, and inside LOOK AT AN INTENSE 12-WEEK CODING BOOTCAMP.

HELPING MEET THE DEMAND OF STUDENTS AND AN EVER-CHANGING TECH INDUSTRY.

>> I DON’T CARE IF YOU’RE IN INSURANCE OR MANUFACTURING OR RETAIL MARKETING.

YOU’RE A TECH COMPANY.

MATT: DEVCODECAMP ISN’T TRADITIONAL IN ANY ASPECT OF I EDUCATION INCLUDING HOW STUDENTS PAY.

EARLIER THIS MONTH, DEVCODECAMP WELCOMED ITS FIRST GROUP OF STUDENTS, LIKE ERIC MIELKE, WHO WON’T PAY A PENNY OF TUITION UNTIL HE HAS A JOB MAKING AT LEAST $40,000 A YEAR.

>> I CAN OF JUMP IN THIS RIGHT AWAY AND I DON’T HAVE TO WORRY ABOUT SAVING MONEY BECAUSE I’M BETTING ON MYSELF BUT THE PROGRAM IS ALSO BETTING ON THEMSELVES TO MAKE SURE WHEN WE

DO GET OUT, WE’RE LANDING AWESOME JOBS.

MATT: THE CONCEPT IS CALLED AN INCOME SHARE AGREEMENT.

AT DEVCODECAMP, ONCE STUDENTS HAVE A JOB THEY’LL PAY 15% OF their salary for three years OR UNTIL $30,000 IS PAID OFF.

>> is there a risk for you guys upfront?

>> THERE’S A RISK THAT WE BASICALLY PUT ALL THIS TIME ENERGY, MONEY INTO SOMEBODY WHO doesn’t want to be here.

MATT: THE OPTION IS MORE EXPENSIVE THAN PAYING UPFRONT OR POTENTIALLY A STUDENT LOAN, BUT THERE’S NO INTEREST.

>> THEY DIDN’T HAVE A MEANS TO BE ABLE TO GO AND DO IT AND WE said OK, we will INVEST IN YOU.

In the long term, it WILL BE MORE THAN OUR STANDARD TUITION BUT IT’S AN INSURANCE POLICY FOR YOU AND IT’S AN OPPORTUNITY FOR YOU.

MATT: DEVCODECAMP IS THE FIRST IN WISCONSIN TO OFFER AN INCOME SHARE AGREEMENT BUT THEY AREN’T ALONE.

PURDUE UNIVERSITY IN INDIANA IS OFFERING THE PROGRAM AS WELL.

WHERE MORE THAN 500 STUDENTS ARE USING THE PROGRAM.

>> I DO THINK THIS IS SOMETHING that can send a signal.

MATT: AT PURDUE UPON GRADUATION and getting a job, students will pay a percentage OF THEIR SALARY BACK TO THE UNIVERSITY.

The amount and percent IS BASED ON THEIR CAREER AND ANTICIPATED SALARY.

>> THEY’RE INTERESTED IN THIS IDEA OF THEIR OWN HUMAN CAPITAL AND INVESTING IN THEIR FUTURE.

CERTAINLY THERE ARE STUDENTS WHO DON’T HAVE OTHER OPTIONS available, either A PARENT WHO CAN TAKE OUT THIS PARENT/PLUS LOAN OR CO-SIGN ON A LOAN BUT WE FIND THAT IT REALLY HAS BROAD

APPEAL.

MATT: the question is how BROAD?

AS BOTH MAJOR UNIVERSITIES AND CONGRESS ARE CLOSELY WATCHING.

>> IT’S GETTING SOME MORE attention.

PEOPLE ARE STARTING TO understand it, but THE NATURAL thing to do is go, wait a minute, what am I missing?

AND THERE’S NOTHING TO MISS.

ADRIENNE: this is an interesting concept and some people don’t like the idea.

MATT: as many supporters as there are, there are critics who are concerned this does not SOLVE the debt crisis whatsoever.

When you look at the amount, it is not cheaper than taking out a loan.

You are paying it back differently in smaller payments, but they say it does not address the bigger issue.

ADRIENNE: Congress is getting involved?

MATT: Congress has tried to regulate this and it has not worked.

Shockingly, this is getting political.

The Trump administration is interested in this model and wants to research more.

To that, Democrats are coming out, some blasting it, including Elizabeth Warren, who was running for president, writing a letter saying, this is deceptive practices AND marketing.

As much interest and conversation it has started, it is heating up politically.

ADRIENNE: do I have to qualify financially to do this?

MATT: no.

If you look at the Purdue, for example, what happens is the foundation pays the University amount the income share agreement is worth, so in theory, the student pays back to

the foundation.

There are a lot of businesses backing that initial payment.

ADRIENNE: our schools here considering it?

MATT: Marquette says no.

We talked to others and they said this is on their radar and we want to see how this works and other places and how the community in Wisconsin will respond.

ADRIENNE: something to think about.

Thank you, Matt.

NOT ONLY COULD INCOME SHARE AGREEMENTS OFFER AN ALTERNATIVE to traditional student loans, they COULD ALSO HELP CONNECT EMPLOYEES WITH FAST-GROWING SECTORS OF THE STATE’S ECONOMY.

WE’RE TALKING MORE ABOUT THIS NOW WITH MATT CORDIO.

HE IS THE FOUNDER AND PRESIDENT OF STARTUP MILWAUKEE, AND THE CO-FOUNDER AND PRESIDENT OF THE SKILLS PIPELINE.

Thanks for being here.

MATT: great to be here.

ADRIENNE: something you do with this skills pipeline is connect people to tech jobs, and tech is becoming important in Wisconsin.

How do you think a program like this could help tech and Wisconsin?

MATT: there was a massive shortage of tech talent in Wisconsin, and we really need to work and take every availabl opportunity to build and develop new tech talent in Wisconsin.

Income share agreements like the one offered are a step in the right direction.

ADRIENNE: why do you think that is?

MATT: I think what is unique about income share agreements is they are not used on credit history or traditional student background.

They are really a unique new option for students to take advantage of and finance their education without going in the debt.

It also makes the educational institutions offering them accountable to make sure they develop talents and the workforce will employ it, and that those students will have an

opportunity to grow their careers in Wisconsin.

ADRIENNE: why tech specifically?

MATT: we have seen income share agreements become popular in tech, but also in other stateS.

They are in CODING boot camps offering them around the country, and it is a unique opportunity for people who may have a four-year degree already in a work experience and want to

learn something new and may not be able to go into debt to explore their next career path.

ADRIENNE: and to take a chance like that.

MATT: yes, so being able to work your way through school after you go through school is a great opportunity for several students and is probably the right choice for them.

ADRIENNE: talk about the state of tech in Wisconsin.

MATT: tech is growing in Wisconsin.

We work closely with companies that are looking to attract talent, or other startups through startup Milwaukee or large corporations like here locally in Milwaukee with

Northwestern Mutual, trying to place an emphasis on growing the tech sector as their workforce needs change.

Wisconsin is certainly going to be impacted by the growing tech sector, and we need to make sure we are building a work force that can kind of be relevant to the 21st century to come.

ADRIENNE: you are passionate about startups.

How does this income share agreement help entrepreneurs?

MATT: I think it helps entrepreneurs by giving them more talent.

I think more tech talent out there, we work with startups and really every size company, and their businesses are impacted when they cannot find talent.

It holds them back from growth and we want them to grow in Wisconsin.

We don’t want them to leave the state and find others as some startups have had to do in the past.

ADRIENNE: that is something that CEOs tell us, that there are not enough people applying for these jobs that are qualified.

Do you think the income share agreement could be the wave of the future?

MATT: it certainly is on opportunity to grow the workforce here, and there are a lot of different things I think, but it certainly is a powerful tool and we are excited it is

offered here by one institution in Wisconsin and we hope to see several more on board.

it would great to see, as you saw Purdue, public and private institutions in the state look potentially at offering their students income share agreements.

ADRIENNE: thank you.

NEXT, GOVERNOR EVERS’ BIG DECISION.

SIGN, VETO, OR TRY TO REVISE THE SPENDING PLAN REPUBLICANS SENT HIM.

WE’LL GET THE LATEST FROM MADISON.

PLUS, WHY A GROUP OF INFLUENTIAL U.W. BACKERS IS STEPPING UP EFFORTS TO TELL THE PUBLIC ABOUT THE VALUE OF THE UNIVE