How Income Share Agreements Are Better than Government College Loans

Source Date: 
Monday, December 31, 2018

It’s too bad that Uncle Sam ever got into the college-financing business. The feds have no constitutional authority to lend money to students (or anyone else) and millions of students have gotten themselves deeply in debt for education of dubious value. Easy federal loans were essential in fueling the “college for everyone” movement that has raised the cost and degraded the educational value of earning a degree.

Often people speak of college as an “investment” but the money for it isn’t invested in any real sense. No person or group evaluates the likely costs and benefits of college for a particular student and then decides if it makes sense or not. The feds simply dish out the funds and if the student can’t later pay, taxpayers suffer the loss.

But there is an alternative that actually involves investment analysis, namely Income Share Agreements (ISA). In today’s Martin Center article, Mary Claire Anselem of the Heritage Foundation discusses this eminently sensible approach.

"If we don't change direction soon, we'll end up where we're going."
– Irwin "Professor" Corey