Sep 21, 2019

Paying for college with your future salary

Illustration: Sarah Grillo/Axios

Agreements in which students pay a share of their income after they graduate and secure a job are being offered at some colleges and coding schools as alternatives to traditional student loans.

What's happening: The Trump administration has discussed experimenting with federal Income Share Agreements (ISAs), and legislation to develop a legal and regulatory framework for the agreements has been introduced in Congress. ISAs are a small part of the higher education financing market and whether students will benefit from them is unknown.

  • Austen Allred, whose Lambda School offers ISAs to students, told Axios this week between meetings on Capitol Hill that oversight is needed.

How it works: Rather than pay tuition up-front, students agree to paying a portion of their eventual income back to educators.

  • There can be minimum salary requirements and limits on how many years students have to pay back their tuition.
  • For Lambda School students, tuition is $20,000. If a student opts for an ISA, they agree to re-pay 17% of their salary for two years, so long as they are earning $50,000. The payback amount is capped at $30,000 and ends after 5 years, regardless of whether the tuition amount has been covered.
  • ISAs are being offered in bootcamps, a handful of colleges and universities — including Purdue, the University of Utah and Colorado Mountain College — and through workforce development programs.

Supporters say they provide financing for students who have maxed out their aid or can't access assistance through the government system.

  • And they argue ISAs force accountability on higher education institutions because if a student can't find a job to pay back their tuition, it is a signal that the institution's programs aren't aligned to the labor market.

But others worry that because high earners effectively cross-subsidize low earners, those students have to pay back substantially more money than they would with a regular loan, notes Axios' Felix Salmon.

  • They're also concerned about the risk of discrimination, since some groups, including men, earn higher salaries out of college.
  • And it is unclear whether ISAs are financially sustainable for offerers. Allred told Wired that Lambda is "burning through millions of dollars" a month.

"We're not saying it is a superior tool to everything else," says Matt Gianneschi, COO of Colorado Mountain College, which is piloting an ISA for a few dozen students with DACA-status using philanthropic donations. (Students in the program agree to pay back the amount they borrowed, not more.)

  • "We're using it as an option for [people for] which there are none," he says.

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Blue Cross Blue Shield insurers sue CVS, alleging drug pricing fraud

Photo: John Lamparski/SOPA Images/LightRocket via Getty Images

Six Blue Cross Blue Shield insurers have sued CVS Health, alleging the pharmacy chain overcharged them based on "artificially inflated prices" for generic drugs and concealed the true cash prices of those drugs.

The big picture: CVS has faced legal scrutiny over its cash discount programs since 2015, and this lawsuit adds big names to a mounting problem.

World coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

New Zealand has only eight active novel coronavirus cases and no COVID-19 patients in hospital after another day of zero new infections. However, the death toll rose to 22.

Zoom in: A top health official told a briefing a 96-year-old woman "was regarded to having recovered from COVID-19 at the time of her death, and COVID-19 is not recorded as the primary cause of her death on her death certificate." But it was decided to include her in the overall tally of deaths related to the virus.

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 10 p.m. ET: 5,690,951 — Total deaths: 355,575 — Total recoveries — 2,350,071Map.
  2. U.S.: Total confirmed cases as of 10 p.m. ET: 1,699,073 — Total deaths: 100,396 — Total recoveries: 391,508 — Total tested: 15,192,481Map.
  3. Public health: CDC issues guidelines for reopening officesFauci says data is "really quite evident" against hydroxychloroquine.
  4. States: California hospitals strained by patients in MexicoTexas Supreme Court blocks mail-in expansion to state voters.
  5. Business: MGM plans to reopen major Las Vegas resorts in June — African American business owners have seen less relief from PPP, Goldman Sachs says.
  6. Tech: AI will help in the pandemic — but it might not be in time for this one.
  7. World: EU proposes a massive pandemic rescue package.
  8. 1 🎶 thing: Local music venues get rocked by coronavirus.
  9. 🎧 Podcast: Trump vs. Twitter ... vs. Trump.
  10. What should I do? When you can be around others after contracting the coronavirus — Traveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  11. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

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Updated 3 hours ago - Politics & Policy