Risk-sharing income share agreements: How a new financing mechanism can protect taxpayers and incentivize universities to offer affordable career-oriented programs – AEI
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Key Points
- Policymakers need to take a hard look at the incentives the higher education system is designed to produce and consider the big changes needed to drive better outcomes for each set of payers.
- If students borrow responsibly for college and earn a good living after they graduate, their alma maters should benefit too. However, if they make too little to repay what they borrowed, the institutions, not taxpayers, should bear the burden.
- To begin to address these challenges, Congress could make income share agreements provided by each student’s institution the primary (or sole) federal financing option available to students.
- Like all income share agreements, students with a risk-sharing income share agreement, or “rISA,” would have their education paid for upfront in exchange for repaying an affordable percentage of their income for a predetermined number of months thereafter.
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