Colleges explore alternatives to student loans

Colleges explore alternatives to student loans

August 25, 2019 2 By Stanley Isaacs


ADRIENNE: THE STUDENT LOAN
CRISIS. $1.5 TRILLION AND COUNTING. I’M ADRIENNE PEDERSEN. TODAY, ON “UPFRONT,” A FIRST OF
its kind program IN WISCONSIN
OFFERING AN ALTERNATIVE TO
TRADITIONAL STUDENT LOANS. WE’LL LOOK AT INCOME SHARE
AGREEMENTS AND SEE HOW THEY CAN
HELP STUDENTS, AND THE BROADER
ECONOMY. PLUS, REPUBLICAN LAWMAKERS SEND
GOVERNOR EVERS THEIR PLAN FOR
STATE SPENDING. WHAT INSIDERS THINK HE’LL DO
WITH IT. AND, WHY A GROUP OF INFLUENTIAL
U.W. MADISON BACKERS SAY IT’S
TIME FOR THE TUITION FREEZE, TO
THAW. Announcer: taking on the issues
important to Wisconsin, this is
“upfront” with Adrienne
Pedersen. ADRIENNE: THANKS FOR JOINING US
TODAY. I’M ADRIENNE PEDERSEN AND THIS
IS “UPFRONT.”
WILL HE OR WON’T HE? WILL DEMOCRATIC GOVERNOR EVERS
SIGN OR VETO THE STATE SPENDING
PLAN REPUBLICANS HAVE SENT HIM? OR IS THERE ANOTHER OPTION? I’LL ASK OUR STATE CAPITOL
CORRESPONDENT LATER IN OUR
PROGRAM. BUT WE BEGIN TODAY WITH A NEW
IDEA TO ADDRESS THE STUDENT LOAN
CRISIS. AND IT IS A CRISIS. IN 2019, STUDENT LOAN DEBT HAS
REACHED A PEAK, MORE THAN 44
MILLION BORROWERS OWE $1.5
TRILLION. IT’S THE SECOND HIGHEST CONSUMER
DEBT CATEGORY. MATT SMITH REPORTS ON AN
EXPERIMENT IN WISCONSIN THAT
SOME SAY COULD CHANGE THE WAY
STUDENTS PAY FOR HIGHER
EDUCATION.>>WE CHECK TO SEE IF VALUE
MODULES TWO IS NOT EQUAL TO
ZERO. MATT: IN MILWAUKEE’S HISTORIC
Third Ward, and inside LOOK AT
AN INTENSE 12-WEEK CODING
BOOTCAMP. HELPING MEET THE DEMAND OF
STUDENTS AND AN EVER-CHANGING
TECH INDUSTRY.>>I DON’T CARE IF YOU’RE IN
INSURANCE OR MANUFACTURING OR
RETAIL MARKETING. YOU’RE A TECH COMPANY. MATT: DEVCODECAMP ISN’T
TRADITIONAL IN ANY ASPECT OF I
EDUCATION INCLUDING HOW STUDENTS
PAY. EARLIER THIS MONTH, DEVCODECAMP
WELCOMED ITS FIRST GROUP OF
STUDENTS, LIKE ERIC MIELKE, WHO
WON’T PAY A PENNY OF TUITION
UNTIL HE HAS A JOB MAKING AT
LEAST $40,000 A YEAR.>>I CAN OF JUMP IN THIS RIGHT
AWAY AND I DON’T HAVE TO WORRY
ABOUT SAVING MONEY BECAUSE I’M
BETTING ON MYSELF BUT THE
PROGRAM IS ALSO BETTING ON
THEMSELVES TO MAKE SURE WHEN WE DO GET OUT, WE’RE LANDING
AWESOME JOBS. MATT: THE CONCEPT IS CALLED AN
INCOME SHARE AGREEMENT. AT DEVCODECAMP, ONCE STUDENTS
HAVE A JOB THEY’LL PAY 15% OF
their salary for three years OR
UNTIL $30,000 IS PAID OFF.>>is there a risk for you guys
upfront?>>THERE’S A RISK THAT WE
BASICALLY PUT ALL THIS TIME
ENERGY, MONEY INTO SOMEBODY WHO
doesn’t want to be here. MATT: THE OPTION IS MORE
EXPENSIVE THAN PAYING UPFRONT OR
POTENTIALLY A STUDENT LOAN, BUT
THERE’S NO INTEREST.>>THEY DIDN’T HAVE A MEANS TO
BE ABLE TO GO AND DO IT AND WE
said OK, we will INVEST IN YOU. In the long term, it WILL BE
MORE THAN OUR STANDARD TUITION
BUT IT’S AN INSURANCE POLICY FOR
YOU AND IT’S AN OPPORTUNITY FOR
YOU. MATT: DEVCODECAMP IS THE FIRST
IN WISCONSIN TO OFFER AN INCOME
SHARE AGREEMENT BUT THEY AREN’T
ALONE. PURDUE UNIVERSITY IN INDIANA IS
OFFERING THE PROGRAM AS WELL. WHERE MORE THAN 500 STUDENTS ARE
USING THE PROGRAM.>>I DO THINK THIS IS SOMETHING
that can send a signal. MATT: AT PURDUE UPON GRADUATION
and getting a job, students will
pay a percentage OF THEIR SALARY
BACK TO THE UNIVERSITY. The amount and percent IS BASED
ON THEIR CAREER AND ANTICIPATED
SALARY.>>THEY’RE INTERESTED IN THIS
IDEA OF THEIR OWN HUMAN CAPITAL
AND INVESTING IN THEIR FUTURE. CERTAINLY THERE ARE STUDENTS WHO
DON’T HAVE OTHER OPTIONS
available, either A PARENT WHO
CAN TAKE OUT THIS PARENT/PLUS
LOAN OR CO-SIGN ON A LOAN BUT WE
FIND THAT IT REALLY HAS BROAD APPEAL. MATT: the question is how BROAD? AS BOTH MAJOR UNIVERSITIES AND
CONGRESS ARE CLOSELY WATCHING.>>IT’S GETTING SOME MORE
attention. PEOPLE ARE STARTING TO
understand it, but THE NATURAL
thing to do is go, wait a
minute, what am I missing? AND THERE’S NOTHING TO MISS. ADRIENNE: this is an interesting
concept and some people don’t
like the idea. MATT: as many supporters as
there are, there are critics who
are concerned this does not
SOLVE the debt crisis
whatsoever. When you look at the amount, it
is not cheaper than taking out a
loan. You are paying it back
differently in smaller payments,
but they say it does not address
the bigger issue. ADRIENNE: Congress is getting
involved? MATT: Congress has tried to
regulate this and it has not
worked. Shockingly, this is getting
political. The Trump administration is
interested in this model and
wants to research more. To that, Democrats are coming
out, some blasting it, including
Elizabeth Warren, who was
running for president, writing a
letter saying, this is deceptive
practices AND marketing. As much interest and
conversation it has started, it
is heating up politically. ADRIENNE: do I have to qualify
financially to do this? MATT: no. If you look at the Purdue, for
example, what happens is the
foundation pays the University
amount the income share
agreement is worth, so in
theory, the student pays back to the foundation. There are a lot of businesses
backing that initial payment. ADRIENNE: our schools here
considering it? MATT: Marquette says no. We talked to others and they
said this is on their radar and
we want to see how this works
and other places and how the
community in Wisconsin will
respond. ADRIENNE: something to think
about. Thank you, Matt. NOT ONLY COULD INCOME SHARE
AGREEMENTS OFFER AN ALTERNATIVE
to traditional student loans,
they COULD ALSO HELP CONNECT
EMPLOYEES WITH FAST-GROWING
SECTORS OF THE STATE’S ECONOMY. WE’RE TALKING MORE ABOUT THIS
NOW WITH MATT CORDIO. HE IS THE FOUNDER AND PRESIDENT
OF STARTUP MILWAUKEE, AND THE
CO-FOUNDER AND PRESIDENT OF THE
SKILLS PIPELINE. Thanks for being here. MATT: great to be here. ADRIENNE: something you do with
this skills pipeline is connect
people to tech jobs, and tech is
becoming important in Wisconsin. How do you think a program like
this could help tech and
Wisconsin? MATT: there was a massive
shortage of tech talent in
Wisconsin, and we really need to
work and take every availabl
opportunity to build and develop
new tech talent in Wisconsin. Income share agreements like the
one offered are a step in the
right direction. ADRIENNE: why do you think that
is? MATT: I think what is unique
about income share agreements is
they are not used on credit
history or traditional student
background. They are really a unique new
option for students to take
advantage of and finance their
education without going in the
debt. It also makes the educational
institutions offering them
accountable to make sure they
develop talents and the
workforce will employ it, and
that those students will have an opportunity to grow their
careers in Wisconsin. ADRIENNE: why tech specifically? MATT: we have seen income share
agreements become popular in
tech, but also in other stateS. They are in CODING boot camps
offering them around the
country, and it is a unique
opportunity for people who may
have a four-year degree already
in a work experience and want to learn something new and may not
be able to go into debt to
explore their next career path. ADRIENNE: and to take a chance
like that. MATT: yes, so being able to work
your way through school after
you go through school is a great
opportunity for several students
and is probably the right choice
for them. ADRIENNE: talk about the state
of tech in Wisconsin. MATT: tech is growing in
Wisconsin. We work closely with companies
that are looking to attract
talent, or other startups
through startup Milwaukee or
large corporations like here
locally in Milwaukee with Northwestern Mutual, trying to
place an emphasis on growing the
tech sector as their workforce
needs change. Wisconsin is certainly going to
be impacted by the growing tech
sector, and we need to make sure
we are building a work force
that can kind of be relevant to
the 21st century to come. ADRIENNE: you are passionate
about startups. How does this income share
agreement help entrepreneurs? MATT: I think it helps
entrepreneurs by giving them
more talent. I think more tech talent out
there, we work with startups and
really every size company, and
their businesses are impacted
when they cannot find talent. It holds them back from growth
and we want them to grow in
Wisconsin. We don’t want them to leave the
state and find others as some
startups have had to do in the
past. ADRIENNE: that is something that
CEOs tell us, that there are not
enough people applying for these
jobs that are qualified. Do you think the income share
agreement could be the wave of
the future? MATT: it certainly is on
opportunity to grow the
workforce here, and there are a
lot of different things I think,
but it certainly is a powerful
tool and we are excited it is offered here by one institution
in Wisconsin and we hope to see
several more on board. it would great to see, as you
saw Purdue, public and private
institutions in the state look
potentially at offering their
students income share
agreements. ADRIENNE: thank you. NEXT, GOVERNOR EVERS’ BIG
DECISION. SIGN, VETO, OR TRY TO REVISE THE
SPENDING PLAN REPUBLICANS SENT
HIM. WE’LL GET THE LATEST FROM
MADISON. PLUS, WHY A GROUP OF INFLUENTIAL
U.W. BACKERS IS STEPPING UP
EFFORTS TO TELL THE PUBLIC ABOUT
THE VALUE OF THE UNIVE