An example would be a student agreeing to pay 10 percent of her salary over 10 years. If she borrowed $100,000 to study computer science, and after graduation nabbed a job paying $100,000 a year, over 10 years she would pay back $125,000 (assuming 5 percent annual salary increases) -- more than she borrowed.  Or if she is unemployed for whatever reason -- can't find work, say, or wants to obtain a graduate degree -- she pays nothing, and eventually could pay back less than she received.

Don't confuse private income-share arrangements with the government's income-based repayment program. In the latest version, new borrowers can repay federal loans by pledging 10 percent of their discretionary income for 20 years, after which the balance is forgiven. As of mid-2015, about 2.8 million borrowers with balances of $157 billion had opted for some form of this plan.

But even under income-based repayment, undergrads pay 4.29 percent interest and graduate students pay up to 6.84 percent. For the financially needy, interest can be deferred, but it gets tacked onto the principal and eventually must be paid. Nearly all students will still pay back more than they borrowed because interest piles up. Monthly payments can be deferred for economic hardship, but only for three years. After 20 years, any forgiven balance is subject to federal income tax. Until it's paid off or forgiven, college debt appears on an individual's credit report.   

What's more, student loans can't be discharged in bankruptcy, leaving default the only recourse for those unable to make payments. At that point, taxpayers are on the hook.

Income-share agreements have none of these drawbacks. They could even pressure colleges to think twice about raising tuition and other expenses, which are skyrocketing because of easy credit, a recent Federal Reserve Bank of New York study found. Investors are more likely to offer generous repayment terms to students who choose fields in great demand, and who select colleges with a high rate of return on their degrees.

Over time, these incentives could produce a college market geared to income-share students looking to maximize their labor- market returns. As it stands now, colleges have little incentive to cut costs so long as students can borrow to their hearts' content.  

The college-debt problem, in some respects, is worse than we thought, recent data show. Outstanding balances now exceed $1.2 trillion, four times the amount of 12 years ago. One in six borrowers is delinquent or in default. Low-income borrowers, especially those attending historically black institutions, two- year community colleges and for-profit universities, hold much of the outstanding debt -- and are behind 70 percent of the defaults.

This is the group that might benefit most from income- share, perhaps in combination with federal loans.    

The old way of liberally doling out loans predicated on a full-time, four-year academic environment doesn't work for everyone. As long as student loans are widely available, colleges will have little incentive to cut costs -- and higher education could be out of reach for millions.

Income-share agreements, if written carefully to balance consumer safeguards and investor inducements, might begin to change that. 

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