Purdue University is enrolling the first round of students in a program that aims to combat student debt for those who promise to pay a share of their future earnings for a certain number of years after they graduate.
Students who opt to participate in the program, called "Back-a-Boiler," enter into income-share agreements rather than taking out a traditional college loan.
The university sets the repayment amount based on the anticipated earnings of a student's area of study, The Indianapolis Star reported. The student's monthly payments under the program would go down if they're unsuccessful or don't earn what they anticipated.
"I always point out to people that it shifts the risk that things work out, or won't work out quickly, from the student to somebody else, mainly the investor," Purdue President Mitch Daniels said.
Amy Wroblewski, a management major, expects to pay about $127 a month for nine years through her income-share agreement, but that cost could go down if she has issues securing a job.
So far, students' interest in the "Back-a-Boiler" program has exceeded the expectations of Purdue officials. More than 120 students have already enrolled in the program, providing upward of $2.2 million in aid for the 2016-2017 school year, and officials estimate that as many as 400 students could be part of the initial group.
"We're out to learn here," Daniels said. "I've been trying to be cautious and low key about this."
Since setting up the program, the university is now focusing on whether "Back-a-Boiler" can become self-sustaining.
Officials plan to seek out investors to front the cost of educating students who participate in the program. The first $5 million was provided by the Purdue Research Foundation.
The hope is that students will settle their repayment amounts and give a little extra to help keep the "Back-a-Boiler" program running.
Daniels and other university officials believe the program could one day become a national alternative to student loan debt.