September 30, 2019
Record number of Purdue students participate in income share agreement program
WEST LAFAYETTE, Ind. – A record number of Purdue University students have received funding for the Fall 2019 semester from the Purdue Research Foundation's Back a Boiler income share agreement program, which provides students an alternative to Federal Parent PLUS and private student loans.
The number of student contracts for the current semester is up over 25% from the same time last year, with 56% of those students being first-time participants. Mary-Claire Cartwright, Back a Boiler program manager, said the record represents another milestone in the program's growth and is a testament to how the fund serves as an equity-based option for students seeking to fund their educations.
"Back a Boiler continues to hold broad appeal," she said. "Students from more than 150 undergraduate majors and all walks of life have received funding, which demonstrates that this type of program can be a successful and valuable alternative."
Cartwright said continued interest in the program also is driven by the tools provided to ensure students are informed. The Back a Boiler website features detailed FAQs, sample contracts and a tool that allows users to quickly compare the Back a Boiler ISA to other financing options.
"We strive to be extremely transparent and consumer protection-friendly," she said. "I think the participation growth can be attributed to that fact. We want to be sure that it's easy to understand and that students are making an informed choice that best suits their lifestyle and financial needs."
When Back a Boiler was launched in the 2016-17 academic year, Purdue became the first major U.S. university to offer an income share agreement as an alternative to Federal Plus and private student loans. Since its inception, the fund has invested $13.8 million in Purdue students.
Initially the program was offered to a limited number of rising juniors and seniors enrolled in the fall and spring semesters. Due to student interest, in April 2017 Back a Boiler expanded to include all rising sophomores, juniors and seniors as well as students enrolled in summer sessions.
Back a Boiler was launched as part of Purdue Moves: Accessibility and Affordability, a multifaceted program created by President Mitch Daniels to make higher education more affordable and to reduce student debt. As part of Purdue Moves, tuition rates have remained frozen for seven years, and it is estimated that from fiscal years 2013-19 Purdue families have saved a total of about $465 million through the university’s deferral of tuition, fee, and room and board increases.
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 typically less than 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 defined minimum annual salary in excess of $20,000. For the current academic year, Purdue caps the most that a student would pay at 2.31 times the original amount funded.
About income share agreements
Income share agreements were conceived in the 1950s but never meaningfully implemented until Purdue's program. Unlike a loan, 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.
Writer: Brian Zink, 765-404-9290, firstname.lastname@example.org
Source: Mary-Claire Cartwright, MCCartwright@prf.org