College is expensive, but it looks like there might soon be another way to pay that tuition bill.
Most students take out loans — about $1.6 trillion in loans are outstanding — or receive scholarships to pay for school, but sometimes that just isn’t enough. Some will take out additional private loans or join the military to be able to afford a college degree — but now, there’s another option.
Purdue University has been testing a new way to help their students pay for their schooling called income share agreements (ISAs). ISA-bound students don’t need loans, scholarships or a part-time job if they don’t want them.
In exchange for paying off schooling, Purdue takes a cut of students’ income for up to eight years after graduation, or until they’ve paid off 250% of the money they’ve been given. If they're unemployed or on vacation, their contract is paused, and they’ll still need to pay off everything when they return.
This may sound great, but widespread implementation of ISAs could easily make college more expensive.
If schools are allowed to both set tuition prices and engage in these agreements, they’ll have no incentive to lower tuition. In fact, as more students take ISA funding, schools have every reason to raise tuition.
And if financial institutions begin issuing ISAs to students, things could get even worse.
Universities could keep raising prices, since they’d be bargaining with a bank instead of students. If tuition rises high enough, the higher education sector could start to look similar to the healthcare system, where consumers pay outrageous prices because they can’t negotiate directly with providers.
ISAs don’t even solve the fundamental problem: higher education just costs too much.
The University of Kansas’ tuition is already prohibitively expensive for many. In-state students pay about $23,000 per year for tuition and housing, while out-of-state students pay nearly $40,000. Instead of finding “innovative” ways for students to pay this amount, we need to find ways to make school cheaper. We shouldn’t be restructuring loans to accommodate massive debt, because students shouldn’t need to go into that much debt in the first place.
Contracting programs similar to ISAs have existed for centuries. Before the United States gained independence from Britain, poor immigrants often signed similar contracts, binding them to work for a period of time in exchange for free passage across the Atlantic. Though they entered their contracts voluntarily, these immigrants couldn’t stop working for their employer throughout that time.
This was called indentured servitude, and it was made illegal under the 13th Amendment.
Obviously, ISAs aren’t nearly as oppressive as indentured servitude contracts, but their principles are similar. In exchange for a very expensive service, individuals sell a portion of their futures. ISAs are still a form of indebtedness that continue to restrict individual freedoms and prey on the less fortunate.
Instead of introducing quasi-indentured servitude programs, universities should find ways to cut costs and lower tuition.
If the University ever tries an ISA program, the student body should reject it outright. No one should be forced into such an agreement, no matter how poor they may be.
Jack Waters is a Senior from Avon, Massachusetts, majoring in physics and economics.