A few Pennsylvania colleges have started offering a loan alternative to students that will allow them to repay their tuition based on their future income.
It’s called an income-share agreement, and it provides students the funds to pay a portion of their tuition without the need for loans. The income-share loan gets paid back once the student is out in the working world.
It is designed to lighten the debt load for recent college graduates, a debt load that has been blamed for everything from low birth rates to a dearth of first-time home buyers.
The agreements are not widely available at colleges in the Greater Lehigh Valley, but some institutions said they are weighing the option.
“We are always looking for more affordable options for students to pay for college and are in the early stages of exploring income-share program options,” said Lori Friedman, director of media relations at Lehigh University.
Friedman noted that, in recent years, Lehigh has increased its cap on college loans from $2,000 to $5,000 to support the needs of all students enrolled at the university. And on its website, Lehigh announced an initiative to pursue better loan alternatives and provide more scholarships, grants and work-study opportunities to bridge the gap between cost of attendance and family contribution to student tuition.
Exploring what fits
Annmarie Ely, a spokeswoman for Delaware Valley University, said the Doylestown school has a goal to “explore income-share agreements and competency-based credits to lower student debt to determine if they are the best fit for DelVal and its students.”
Ely said the university sees income-share agreements as a creative alternative that allows students the opportunity to get their education while addressing issues of student debt and a student’s ability to afford education.
“Our aim in exploring (alternatives) is to supplement our financial assistance options to reduce students’ debt load even further,” said Ely, noting that the average eligible student gets more than $28,500 in aid
Penn State University, which has campuses in Lehigh Valley and Berks County, does not offer income-share agreements, but the college has been working to make its education affordable, said Penn State spokesman Ben Manning.
Manning cited recent increases in state appropriations that have allowed the university to freeze tuition for undergraduates that are Pennsylvania residents. There are also programs in place to reduce the time in obtaining a degree
“Penn State has enacted a variety of initiatives focused on increasing student retention and graduation, ensuring timely graduation, decreasing the rate of student borrowing, and decreasing the rate of attrition due to financial challenges,” Manning said.
Some college representatives said the income-share option is not currently on the table.
Greg Mitton, associate dean of admission and director of financial aid at Muhlenberg College in Allentown, said the college is well aware of the agreements but does not intend to implement them.
“At this time, Muhlenberg has chosen not to participate in these programs. We constantly evaluate options available to students to make the college experience affordable,” Mitton said.