The Case For Income Share Agreements

For more information on income participation agreements, see Carlo Salerno, vice president of research at Campus Logic, said neither approach to income-participation agreements is intended to fully address the problem of increased funding. (Salerno previously launched a platform that allowed students to market directly to investors for financial support and was a former supporter of the income participation model. CampusLogic announced a partnership with Vemo in June.) Because Vemo develops income-participation agreements for each institution, repayment obligations vary. DeSorrento stated that adapting ISAs to each college`s objectives is an advantage of the business model. But student loans aren`t the only way to finance your training. If you are considering using an external lender to finance your education expenses, you should consider an income participation agreement. In the 1970s, Yale University tried a modified form of Friedman`s proposal with several cohorts of students. At Yale, all members of the cohort agreed to repay a percentage of the salary until the balance of the total cohort was paid, instead of entering into individual contracts for a certain number of years. However, the system left students frustrated with paying more than their fair share by being forced to pay on behalf of their peers who were not ready or unable to repay their loans. [6] “No one has a problem with the income and sharing agreement at a university. They have another problem that they are trying to solve,” said Tonio DeSorrento, CEO of Vemo Education. To combat the burden of student debt, universities are beginning to offer an “income participation contract.” Although it is touted as an affordable and smart alternative to student credit, it is still just debts of your income – literally.

Julie Margetta Morgan, a Fellow at the Roosevelt Institute, said the lack of comprehensive data on the outcomes of income participation agreements is just one of the areas where contract information and research is lacking. It is not clear, she said, how many colleges impose binding arbitration regulations or when a student is considered to be late under the treaties.