In 2014, I founded a startup in Utah. The team was fired up and ready to invest the time, money, and effort required. But one colleague was taking on more risk than the rest of us. Seven years after earning a law degree, he was mired in $200K of student debt. He was unable to buy a house and ended up teaching himself to program to find better-paying work.
What If Your University Tuition Was Based on Your Future Salary?
The founder of Lambda School on its experiment with income-sharing agreements.
October 10, 2019
Jonathan Kitchen/Getty Images
Summary.
The risk equation in higher education is deeply flawed. An overwhelming burden is placed on the student, not the educator. Students are expected and encouraged to dream big, get into the best school they can, study what they love, and spend tens of thousands of dollars — sometimes hundreds of thousands of dollars — to do it. Today, nearly 70% of students take on debt. Forty-four million borrowers in the U.S. owe a collective $1.5 trillion. Two years ago, Lambda School was founded with an underlying hypothesis that if we can eliminate risk and align the incentives of students and schools on a large enough scale, we can democratize access to career and income mobility. With Income Share Agreements (ISAs), the school invests first in the form of overhead, education, and support. The student pays zero (or little) money upfront, and is incentivized to secure a high-paying job. They pay an agreed-upon percentage of their income to the school, only when they’re gainfully employed. Put simply, the school doesn’t make money unless its students do.