WASHINGTON (Thursday, June 29, 2017) — Rep. Luke Messer (IN-06) is working with Purdue University President Mitch Daniels to help more students afford a college degree.
Messer introduced bipartisan legislation with Rep. Jared Polis (D-CO) today to create a nationwide framework for an innovative higher education financing option called income share agreements (ISAs), pioneered at Purdue University by President Daniels.
Income share agreements allow organizations or entities to fund a student’s college degree in exchange for affordable, income-based payments after the student graduates. Unlike private student loans, ISAs do not accrue interest and a student only makes payments if they are employed and receiving an income above 150% of the Federal Poverty Line ($18,090 at present) after graduation.
“The old model to fund a college degree does not work for all students,” Messer said. “Indiana families are struggling to send their kids to college, and entire generations of young Hoosiers are entering the workforce handcuffed by student loan debt. President Mitch Daniels’ program at Purdue is changing the game. Income share agreements offer students a funding plan that will always be affordable, with payments that align with the income they earn after graduation.”
According to 2015 data from the Institute for College Access & Success, 61 percent of college students in Indiana graduate with student debt, with an average of about $30,000 per borrower. Indiana’s student loan default rate is among the highest in the country, with about 15 percent of Indiana students not able to pay back their loans.
Messer’s legislation, the Investing in Student Achievement (ISA) Act of 2017, is inspired by Purdue University’s ‘Back a Boiler’ program, which is the first major income share agreement program in the nation and last year offered 160 students ISA “contracts” funded by investors.
"Purdue is encouraged by the success of the ‘Back a Boiler’ ISA fund and that we’ve been able to extend it to an even greater number of Purdue students for the upcoming year,” said Purdue University President Mitch Daniels. “Interest in the program from universities across the country remains strong. It is our hope that the bipartisan legislation to clarify the framework for Income Share Agreements introduced by Reps. Messer and Polis will be given favorable consideration in Congress and result in widespread availability of ISAs to college students nationwide."
Messer’s legislation creates a legal framework so that higher education institutions and private investors can more easily facilitate income share agreements while establishing strong consumer protections to safeguard students, including caps on payments based on income and length of the contract.
“If we want the economy to grow, and people to prosper, education after high school must be accessible to everyone. The cost of college has skyrocketed. We can make college more affordable and accessible by thinking outside-the-box. Paying off student loan debt should not prohibit you from buying a home or saving for retirement,” Rep. Polis said.
Indiana Senator Todd Young and Florida Senator Marco Rubio have introduced similar legislation in the Senate.
VIDEO of Rep. Messer discussing the Investing in Student Achievement (ISA) Act of 2017 can be found here. A copy of the BILL TEXT is available here.