At an event in April 2019, Diane Jones, the Education Department’s principal deputy undersecretary, said the department was considering an experiment to help colleges offer income-share agreements (ISAs), a form of financing where students who borrow money promise to pay back a percentage of their future income as repayment.
While those plans never materialized, colleges are nevertheless pushing forward.
In October, Robert Morris University launched its “Colonial Fund,” which lets students borrow $5,000 through an income-share agreement. Last month, nine historically Black colleges and universities announced plans to offer a similar income-based financing option through a nonprofit funded by Robert Smith, the private-equity billionaire who also paid off the student debt of the 2019 graduating class of Morehouse College.
To date, about 60 U.S. colleges offer ISAs, estimates Tonio DeSorrento, CEO of Vemo Education, which designs and services such agreements for universities and vocational educational programs.
More common among private vocational programs, income-share agreements are increasingly offered by colleges and universities. Yet with little data on outcomes from ISAs and with labor markets upended by a pandemic, the exercise remains very much an experiment in higher education.