Originally published: Entangled Solutions | May 2017
The cost of attendance is going up and low-quality programs persist. Students are defaulting at high rates and parents are over-borrowing. Only students with good credit or a cosigner can get a loan—the rest are left out of the system. Innovative programs that improve learning methods lack access to federal funding. Innovative financing programs can help the field overcome serious problems like these. Alternative student aid programs address at least one of the four major issues in education—access, risk-sharing, program quality, and education innovation. Three alternative student aid models—private borrowing, employer-paid, and refund-based—are explored in this paper. Income share agreement (ISA) programs emerge as having significant potential for impact in each of the four issue areas. To reach a desired future state in which ISAs are widely available and easily accessible to all, this paper lays out six action items for philanthropists, policymakers, lenders and service providers, and education providers.