Erik Paulsen: “We continue to hear about the challenges for college students who borrow more and more to pay higher tuition rates and…”

“We continue to hear about the challenges for college students who borrow more and more to pay higher tuition rates and then are saddled with huge debt loads that they will have great difficulty paying back. The average debt for a 4-year college student today is nearly $37,000. We need to explore new ways to ensure that every student has the opportunity to go to school, to develop their skills, and then pursue their dreams without feeling deterred by the price tag. I think we need to look at a new approach, an approach that would help students pay for college. It is a concept known as an income-share agreement. It is a concept that would provide students the funding that they agree to pay back as small, affordable portions of their income over the years following graduation. Income-share agreements are interest free, and students only will make those payments if they are employed and if they receive an income that meets a certain threshold. This method of financing puts less pressure on students to keep up with fixed high-interest payments while they are faced with job uncertainty. Rather than accruing debt under the traditional student loan structure, this makes the investment in these students' future more equity-based. Their payments are guaranteed to be affordable, rather than fixed, and a certain price. This is a much more manageable plan for students, Mr.…”