Photo: Flatiron School

Amid a political uprising against student debt, some colleges and skills schools are offering a tuition scheme in which students commit to paying a fixed percentage of their after-graduation salary for five or more years.

What's happening: The system, called "Income Share Agreements," responds to what many experts call a student debt crisis: some 44 million Americans now owe some $1.5 trillion, and most of the Democratic presidential candidates are calling for some form of free college or trade school, and debt forgiveness.

  • ISAs look a lot like loans, and typical terms result in students paying back 150% to 250% of the original tuition.
  • But loans have much the same results, and ISAs are missing a key downside to straight borrowing — you shouldn't be able to default on one because you typically only start repaying once you are employed and earning a certain minimum income.

Driving the news: In an announcement on Thursday, the Flatiron School, a data bootcamp owned by WeWork, said it will fund $100 million in ISAs to future students. Offered in WeWork offices and in online versions, Flatiron courses are $15,000 in tuition.

  • After graduation, you begin repaying the tuition at 10% of your gross salary as long as you are earning $40,000 or more. If you earn, say, $70,000 a year, you would end up repaying $21,500 over approximately five years.
  • "In any month they are not employed or earning the equivalent of $40,000 or more a year, they don't pay. With student loans, you owe regardless of if you work," said Adam Enbar, CEO of the Flatiron School.

The backdrop: The idea of promising a portion of your future income as a form of investment in your potential goes back to 1945, and a book by Nobel laureate economists Milton Friedman and Simon Kuznets.

Many experts call student loan programs a favorable aspect of the U.S. higher education system since they allow students to go as far as they can academically, all the way through a world-class doctorate. "If you are going for a master's degree, there is no limit to what you can borrow. You can do income-based repayment," said Kevin Carey, an expert at New America.

  • But many student also get in over their head, either from borrowing too much or failing to get a job paying enough.
  • So in 2016, Purdue University, reaching back to the Friedman-Kuznets idea, began a still-small trend among universities by offering ISAs to its students.

The bottom line: ISAs are not the answer to the student-debt problem. In a vocational school such as the boot camps, they offer financing for students who cannot afford to pay monthly. Experts say that, in most cases, loans are still the best option for financing college. "Because ISAs are a shiny object, it doesn't mean they are the best option," Carey said.

Go deeper

Ben Geman, author of Generate
6 mins ago - Energy & Environment

The climate stakes of the Supreme Court fight

Illustration: Aïda Amer/Axios

Ruth Bader Ginsburg's death and the battle over her vacant Supreme Court seat have real implications for energy and climate policy.

Why it matters: If President Trump replaces her, the court will likely become more skeptical of regulations that claim expansive federal power to regulate carbon under existing law, and perhaps new climate statutes as well.

Dion Rabouin, author of Markets
19 mins ago - Economy & Business

The tech war between the U.S. and China escalates

Illustration: Aïda Amer/Axios

Economic tension between the U.S. and China continues to escalate but is shifting in focus — away from the tit-for-tat trade war and toward a more direct confrontation over the future of technology at the heart of the conflict between the world's two largest economies.

Why it matters: The battle between the U.S. and China was always about tech supremacy and the direct confrontation could result in an accelerated splintering of global supply chains and a significant reduction of international commerce.

Mike Allen, author of AM
Updated 32 mins ago - Politics & Policy

Trump's next moves in Supreme Court fight

Photo: Peter Zay/Anadolu Agency via Getty Images

President Trump told "Fox & Friends" on Monday that he plans to announce his pick to replace Justice Ruth Bader Ginsburg on the Supreme Court on Friday or Saturday.

The state of play: Axios has heard that Trump's choices to succeed Justice Ruth Bader Ginsburg are down to two women, both federal appeals court judges. The frontrunners are Amy Coney Barrett of Chicago, the early favorite, and Barbara Lagoa, who is viewed as easier to confirm. The Senate confirmed Lagoa 80-15 last year, so many Democrats have already voted for her.