Income sharing instead of loans

[polly_mer]

https://www.nytimes.com/2021/03/25/business/student-loans-black-students-hbcu.html

I thought the arrangements had just died quietly as a bad idea, but apparently not.

[Durchlässigkeitsbeiwert]

The specific arrangement described in the article is indeed quite bad: unless one drops out, the effective interest rate on the loan becomes extortionate. Though, this looks like an inevitable outcome of combining way too short repayment period with an adverse selection of participants.
I disagree that this mechanism a bad idea per se: implicit "income sharing" underpins governmental funding of post-secondary education in many jurisdictions. However, it requires lender with truly long-term view (state or well-endowed university).

As a side note.
"Like most lenders in this market, Stride varies its repayment terms depending on the borrower's earning potential. An English major typically will need to fork over a higher percentage of salary than an engineering student."
- this resolves much of the argument in the adjacent "doomed humanities" thread.