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I'm confused by your posts. How can getting a student loan at more than 20% annual compound interest be good for anyone, when interest continues to accrue whether you make payments or not? If the person doesn't earn enough to make payments for 20 years the balance would still be $3.8 Million on a $100,000 loan. That's not payable in a lifetime. Are you saying the person at Purdue who endorsed this deal doesn't understand this?
It's not a loan. No interest is ever charged or ever accrues. It's an Income Sharing Agreement. Please read my prior post.
Purdue is my alma mater and I have to say something doesn’t sit right with me about this. Yeah it’s on the borrower but I suspect there was some deception involved. This is an eighteen year old kid not an attorney.
And it’s not like he took out $300k for a masters degree in wine tasting. $40k for an engineering degree from a top engineering school isn’t at all unreasonable. He could have paid that off in a few years with a federal loan with a reasonable interest rate. But this ISA program seems somewhat predatory to me and I’m shocked Purdue endorses and apparently promotes it.
It's not a loan. No interest is ever charged or ever accrues. It's an Income Sharing Agreement. Please read my prior post.
OK, then how does a $37K loan for three years of college have a $99K balance by the time the student graduates? Explain that. "Income Sharing Agreement" sounds like an indentured servant for life agreement. How is that even legal with supposed consumer protections in place? A loophole maybe? Maybe the next phase is selling their offshore subsidiary your kidney to pay off the balance?
OK, then how does a $37K loan for three years of college have a $99K balance by the time the student graduates? Explain that. "Income Sharing Agreement" sounds like an indentured servant for life agreement. How is that even legal with supposed consumer protections in place? A loophole maybe? Maybe the next phase is selling their offshore subsidiary your kidney to pay off the balance?
I think it’s capped at a percentage of income for a term of 10 years and the balance is “discharged” after that. Definitely not worth it for an engineer with $40k in loans.
OK, then how does a $37K loan for three years of college have a $99K balance by the time the student graduates? Explain that. "Income Sharing Agreement" sounds like an indentured servant for life agreement. How is that even legal with supposed consumer protections in place? A loophole maybe? Maybe the next phase is selling their offshore subsidiary your kidney to pay off the balance?
That's how much he'll pay (and possibly more than that if his income increases more than predicted) by fulfilling the terms of his ISA. He's agreed to pay a certain percentage of his income for 10 years (or whatever the term of his ISA). Signed the contract himself.
Indentured servant for life? No. But he did legally agree to be one for 10 years (or whatever the term of his ISA).
I'm confused by your posts. How can getting a student loan at more than 20% annual compound interest be good for anyone, when interest continues to accrue whether you make payments or not? If the person doesn't earn enough to make payments for 20 years the balance would still be $3.8 Million on a $100,000 loan. That's not payable in a lifetime. Are you saying the person at Purdue who endorsed this deal doesn't understand this?
There is nothing confusing about InformedConsent's postings.
This is an INCOME SHARING AGREEMENT. Not a loan.
Some students will win by doing it this way, others will lose. It's a gamble.
That was very helpful. I have never heard of anything like that before, but according to this article it does not seem to be a very common program. Even the hypothetical contract seems to have capped the total amount owed at no more than two times the actual amount borrowed. What was this guy’s contract? He’s already at 2.5x times what he borrowed.
That was very helpful. I have never heard of anything like that before, but according to this article it does not seem to be a very common program. Even the hypothetical contract seems to have capped the total amount owed at no more than two times the actual amount borrowed. What was this guy’s contract? He’s already at 2.5x times what he borrowed.
One piece of info needed not given is what is he making?
60K. The program is a screw job.
160K. Changes the equation quite a bit.
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