Home News President Speaks: A case for income-share agreements at colleges – Higher Ed Drive

President Speaks: A case for income-share agreements at colleges – Higher Ed Drive

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Clarkson University offers the financing option to around two dozen students a year along with additional academic and career support.

Editor’s note: Tony Collins is the president of Clarkson University, in New York. You can read Higher Ed Dive’s coverage of considerations for using income-share agreements here.

We see it in the headlines on a regular basis: The salary premium of a college degree remains significant, but the costs and associated risk have never been higher. Data from the Federal Reserve Bank of New York shows the average college graduate earns around $30,000 a year more than someone with only a high school degree, but that average hides a lot of variance. And the COVID-19 crisis has magnified this difference. In times of economic downturn, college degrees are an even more important proxy for job readiness — at the exact moment they become more difficult to afford.

For families with a college-bound student, this can make the decision even more paralyzing. As the president of a private research university, we often hear from parents and prospective students asking the ultimate question: How do I know if this degree will pay off?

One answer is to ensure institutions have skin in the game. Even before the pandemic, so-called risk-sharing models, like income-share agreements, were emerging that sought to align the cost of college with student outcomes after graduation. The ISA math is simple: If a student graduates and their income meets a certain threshold, they pay more for their credential. If they do not, they pay less — no questions asked.

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