April 3, 2017
Purdue expands income share agreement program to include more students, summer session
WEST LAFAYETTE, Ind. – Purdue Research Foundation announced Monday (April 3) that it is expanding its Back a Boiler – ISA Fund program to include all rising sophomores, juniors and seniors and will offer the program to eligible students enrolled in the 2017 academic summer session.
When launched one year ago, Purdue’s income share agreement program was offered to a limited number of rising juniors and seniors enrolled in the fall and spring semesters of the 2016-17 academic year.
“Our goal for the first year was to offer Back a Boiler to students who planned to borrow through private and Parent Plus loans in addition to any public-subsidized loans,” said Brian Edelman, chief operating officer of the Purdue Research Foundation, who worked closely with Purdue’s Division of Financial Aid to create the program. “Although Purdue’s graduates with debt carry a lower amount than the national average, any debt is a concern. We wanted to offer an option to reduce that interest-bearing debt, and I believe we have that with this program.”
According to the Economist, the average college debt is more than $37,000. Purdue students who graduate with debt owe an average of about $28,000.
This year, the Purdue Research Foundation distributed just over $2 million to about 160 juniors and seniors in 79 majors through Back a Boiler.
“We have great confidence in the program, and many of the questions we received were really requests to expand the program to include more students,” said Edelman. “That is what we are doing.”
At the time the program launched, Purdue University was the first major research university in the U.S. to offer an income share agreement as an alternative to Federal Plus and private student loans.
Back a Boiler offers students and their families an alternative financing option in which a student receives education funding in exchange for an agreed-upon percentage of post-graduation income over a set number of years. The Back a Boiler - ISA Fund payback period is about 10 years. An ISA has no principal balance or interest, so its payments adjust with the student's income over the life of the contract and payments do not begin until the student is employed and earns a minimum annual salary of $20,000.
Purdue Research Foundation also launched Pave the Way through the University Development Office, a philanthropic component to complement Back a Boiler. Beginning this fall, Purdue students who apply to take part in Back a Boiler, may also apply for available funding support from the new Pave the Way program.
“The interest in the program from other major academic institutions has been high as well,” Edelman said. “That is why we are offering a joint initiative with Vemo Education to help colleges and universities design and implement income share agreements to their own students. We are happy to share what we have learned and help other institutions leverage our experience to develop similar programs.”
Any proceeds received by Purdue Research Foundation from the partnership will go back into the Back a Boiler program to support enrolled students in the form of scholarships or other non-obligatory aid.
About Income Share Agreements
Income share agreements were conceived in the 1950s as a mechanism to enable schools to share risk with students by aligning institutional revenue with student outcomes after graduation. An ISA has no principal balance or interest, so its payments adjust with the student’s income over the life of the contract. If a student makes less income than expected, he or she is not beholden to the investors for any more than the agreed-upon percentage of actual income earnings.
About Purdue Research Foundation
The Purdue Research Foundation is a private, nonprofit foundation created to advance the mission of Purdue University. Established in 1930, the foundation accepts gifts; administers trusts; funds scholarships and grants; acquires property; protects Purdue's intellectual property; and promotes entrepreneurial activities on behalf of Purdue. The foundation manages the Purdue Foundry, Purdue Office of Technology Commercialization, Purdue Research Park and Purdue Technology Centers. The foundation received the 2016 Innovation and Economic Prosperity Universities Award for Innovation from the Association of Public and Land-Grant Universities. For more information about funding and investment opportunities in startups based on a Purdue innovation, contact the Purdue Foundry at firstname.lastname@example.org.
Writer: Cynthia Sequin, 765-588-3340, email@example.com
Source: Brian Edelman, 765-588-1039, firstname.lastname@example.org