Document Details

Title Students as Start-Ups- Purdue University bets that a degree really does pay
Author Richard Garrett - Director, OBHE


If a degree pays so well, why don’t universities make education free and take a percentage of the salary of their successful graduates?

That is the idea behind Back a Boiler, a pioneering initiative from Purdue University in the United States. In recent decades, tuition fees in the US have far outpaced inflation, and even healthcare costs. Total student debt now exceeds $1.3 trillion, higher than credit card debt. The average student loan debt is $27,000. The federal government is keen for colleges and universities to rein in tuition increases and show value for money. Hilary Clinton, the Democratic nominee for president, has gone so far as to propose tuition-free undergraduate education at in-state public institutions.

Purdue University is taking a fresh approach to the price problem. Under the Back a Boiler scheme, students pay nothing while at school. Six months after graduation, once earning a sufficient salary, x% of their wages will be paid to Purdue over a fixed number of years. The Purdue Research Foundation, which manages the university’s endowment, has put up $2m to support over 100 Purdue undergraduates. Purdue argues that these Income Share Agreements (ISAs) are a way to rein in spiraling student debt and rising defaults, and to help the university better understand the value of its degrees.

How do ISAs work, and do they have game-changing potential?

Date 12/09/2016
Region(s) North America
Countries United States

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