U.S. Sen. Marco Rubio, R-Fla., and U.S. Rep. Tom Petri, R-Wis., introduced legislation Wednesday that would provide individuals seeking higher education with an alternative to student loans.
The Investing in Student Success Act proposes to create a legal framework where individuals or organizations can provide students with money in exchange for receiving a percentage of the student’s income for a set period of time following graduation.
“Far too many students struggle to obtain enough financing through traditional sources to pay for college, and many others are saddled with unaffordable payments after graduation,” Petri said in a release. “These plans would help all students get the financing they need—students from disadvantaged backgrounds—but without the anxiety that comes with traditional loans.”
With no loan balance to repay, students with low earnings would be required to pay less than those with higher incomes.
The arrangement would be beneficial for both students and investors, according to Petri’s press secretary, Lee Brooks.
“As with any company investing in a startup business, there is going to be some risk involved, but the company or the organization offering these types of plans to students would have a vested interest in their success,” Brooks said.
Both Rubio and Petri have talked about the need to reform higher education financing and Rubio discussed the possibility of also expanding income-based repayment of federal student loans last February at Miami-Dade College.
“Fostering more choice for students to fund their education guarantees opportunity and equips people with the tools needed to achieve the American Dream,” Rubio said in the release.
