Universidad Tecnológica de El Salvador
No Tuition, but You Pay a Percentage of Your Income (if You Find a Job)
Article

No Tuition, but You Pay a Percentage of Your Income (if You Find a Job)

Andrew Ross Sorkin
The New York Times, 2019
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Recommendation

The cost of higher education in America compels many students to rack up crushing amounts of debt to earn a degree. In response, an alternative-model venture, the Lambda School, launched in 2017. According to journalist Andrew Ross Sorkin in this balanced overview for the general reader, the online vocational education firm does not charge students upfront tuition costs. Instead, graduates agree to fork over part of their income for a specified length of time after they land high-paying jobs. The idea elicits valid criticisms, but some see it as a creative way to close workforce gaps.

Summary

In 2018, student loan debt in the United States reached an unprecedented $1.5 trillion, with the average borrower owing $22,000 by graduation. Silicon Valley capitalists are testing one possible solution by funding “Income Share Agreements” (ISAs), which involve deferred tuition. In exchange for paying no upfront costs, graduates who secure high-salaried jobs agree to pay back the cost of their education through income deductions.

In January 2019, the Lambda School start-up received $30 million in venture capital. The money will initially finance ...

About the Author

Andrew Ross Sorkin is a columnist at The New York Times, and the founder and editor-at-large of DealBook.

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