A Georgia university announced Monday a unique approach to help students pay tuition that's being used by other schools in the country but questioned by some education leaders and politicians.
Brenau University is partnering with Vemo Education on a plan that will let students use “Income Sharing Agreements” to fund their education.
Income Sharing Agreements, or ISAs, require a student to commit a percentage of their future career earnings over a period of time to repay portions of their tuition.
“A student signs an ISA for $7,500,” Vemo explains on its website. “In return, the student agrees to share 3% of their post-graduation income for a maximum of 75 monthly payments.”
The website says students make no interest payments.
Brenau has four Georgia campuses and about 3,800 students.
“It’s only natural that we provide an outcomes-based model to help drive access and affordability,” Brenau’s executive vice president David Barnett said in a statement. “With ISAs, Brenau students will have the freedom to pursue their academic interests; they just won’t have to worry about unaffordable loan repayment or the other strains that come with traditional student loan debt.”
About 57% of Georgia's 2017 college graduates carry student loan debt averaging $28,650, according to the most recent data from the Institute for College Access and Success.
Brenau, a nonprofit school with campuses in Augusta, Fairburn, Gainesville and Norcross, said in a news release that many schools are offering such agreements as an option for students. The university also offers online courses and has a campus in Florida. Some education experts and federal lawmakers argue the agreements are unregulated and potentially predatory.
Schools such as Purdue University in Indiana, offer ISAs through its research foundation. Purdue gives students at least $5,000 per semester or up to 15% of their expected annual income. Purdue doesn't charge interest, but the amount of money students are required to pay can increase if the former student's income increases.
The Flatiron School, a for-profit coding school that opened a campus in Midtown Atlanta last year, has an Income Sharing Agreement that requires students to pay 10% of their monthly gross income as long as they're making at least $40,000 a year, a spokeswoman told The Atlanta Journal-Constitution earlier this year.
The school started offering ISAs in January. Students make a maximum of up to 48 monthly payments, according to information on its website. The school has 23 students.
Credit: Brenau University
Credit: Brenau University
U.S. Department of Education officials are working on a pilot program that would use federal student aid to help support Income Share Agreements, the news site, Politico, reported in June. Three congressional Democrats, including presidential candidate Elizabeth Warren, wrote Education Secretary Betsy DeVos in June raising concerns about ISAs. The lawmakers said Purdue's program could require students to pay 2.5 times the original amount borrowed for defaulting on repayments.
State Sen. Sheikh Rahman, D-Lawrenceville, introduced legislation earlier this year to allow some Georgia students to repay tuition with a portion of their future earnings. Lawmakers had many questions about how the idea would work and the bill was held in the senate's higher education committee without a vote.
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