This Boil(er)s My Blood

[davewill]

Purdue’s Back a Boiler program, launched in 2016, offers ISAs to students seeking alternatives to traditional federal and private student loans. Feldman's son took out a $10,373 ISA for the 2018-19 academic year, and a $29,491 ISA for the 2019-2020 year, according to documentation seen by Yahoo Finance.

That $39,864 loan ballooned to $99,660.50 as of January 2022.

https://finance.yahoo.com/news/purdue-in...57798.html

This seems doubly remarkable considering that for much of the intervening period, there has been stop on interest accrual. Fine, I get that people need to read the fine print and all, but having this kind of thing branded by the university, apparently contrary to the law, is inexcusable.

[Flelm]

I view ISAs with a lot of suspicion, and don't think I would ever use one myself, but I notice in that entire article they don't once state the terms of the ISAs the student took out, or his current income.

[carrythenothing]

That $99,660.50 isn't from interest, though, is it? I think it's an estimated total based on a percentage of his current income -- the basic premise of an income share agreement.

That being said, I'm unsure why a university like Purdue (not PUG) can't provide more funding in the form of institutional grants and scholarships.

[davewill]

That $99,660.50 isn't from interest, though, is it? I think it's an estimated total based on a percentage of his current income -- the basic premise of an income share agreement.
...

No, it's not. If you follow the link in the article (that's why I included the link) you can see that they simply expect to collect a percentage (3.11% in the example in the link) of whatever you make. Of course, their example is contrived to make it look cheaper than a regular loan. It likely became even bigger because of the big rise in salaries that has happened in tech over the last two years. The way I see it, the lender is raking in a huge windfall that they did lttle to earn, even granting that they are taking on some risk from students who fail to become fully employed. Of course, considering that not many Purdue graduates are likely to fail to get a decent job, the risk seems pretty damned low.