Brendan Burke is a college graduate who’s working two part-time jobs as a gardening assistant and an event planning assistant. He spends his days in the heat, fertilizing plants, while dealing with back-breaking pain, and stretching every so often to avoid cramping and stiffness before pushing a dusty wheelbarrow full of soil. After spending a day of hard labor with aches in his bones and dirt caked under his fingernails, Burke has to get ready for his next job.
Burke, who graduated from Purchase College in January 2018, has been working menial jobs that don’t require a college education to make payments toward his student loans. He has trouble finding work because he doesn’t have the experience employers are looking for, even after receiving a college degree. His grace period is almost up for his student loans, so he has been forced to take any job he can get to scrape by.
“It affects my life because I feel more trapped than ever because I want to pay off my college debt and live my American Manifest Destiny,” Burke said. “I want to have fun and do good for humanity.”
Millions of college graduates just like Burke are struggling to pay off their student loans while trying to find work in their professional field. For many, paying off their student debt has become a life sentence given the amount of debt they incur for their education.
The reason for rising college tuition every year is largely due to substantial cuts to state funding for public universities. Today, states, on average, spend a lot less on their students than they did in 2008. Nationwide, out-of-pocket tuition at public universities is a larger component of revenue than state funding.
Colleges are not preparing graduates for the real world, such as teaching skills to get full-time jobs. According to the 2018 Job Outlook Survey, 90 percent of college graduates thought they were competent for employment, while only 43 percent of employers agreed.
One solution that could hold universities accountable for their post-graduate outcomes and help reduce student debt levels are Income-Share Agreements (ISAs). ISAs are agreements that allocate a certain percentage of a graduate’s income for a given period to pay their university back. ISAs largely eliminate the need for the type of student loans we see today.
ISAs are nothing new. In fact, they date back to the 1950s and were pioneered by Purdue University and Nobel Prize-winning economist Milton Friedman. ISAs were reintroduced in 2016 by Purdue University and are once again emerging as an alternative to high-interest student loans.
ISAs allow more flexibility for students; students can decide on a certain percentage of income and the amount of years they want to repay their loans. ISAs also take away the burden from taxpayers if student loans are not paid. To protect students, Purdue University caps their ISAs to 15 percent of income and limits total contributions to 2.5 times the amount of tuition originally paid.
ISAs make sense for people like Burke and for higher education.
Burke is still working menial jobs, hoping to eventually land a position in his field. In the meantime, he is stressed out trying to make minimum payments on his student loans. In a world where ISAs were the norm, he could dedicate his time to finding the right job instead of scraping by.
Colleges have to start taking responsibility for helping their students succeed after graduation by preparing them for the skills they need to acquire a job in the workforce. ISAs are one solution that can hold colleges accountable and grant students that graduate with some success.
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Header image: Brendan Burke