First, let’s start off with some numbers so you can understand the absolutely miserable situation we are in.

• $1.48 trillion in total U.S. student loan debt
• 44.2 million Americans with student loan debt
• Student loan delinquency rate of 11.2 percent (90+ days delinquent or in default)
• Average monthly student loan payment (for borrower aged 20 to 30 years): $351
• Median monthly student loan payment (for borrower aged 20 to 30 years): $203

That delinquency rate of 11.2 percent? During the peak of the housing crisis, the delinquency rate on home loans only reached 10.6 percent. The $1.48 trillion in student loan debt is $620 billion more than the total U.S. credit card debt.

Obviously, these numbers have been driven by the increasing cost of attending college.

According to Gordon Wadsworth, author of The College Trap, “…if the cost of college tuition was $10,000 in 1986, it would now cost the same student over $21,500 if education had increased as much as the average inflation rate but instead education is $59,800 or over 2 ½ times the inflation rate.”

The path we are on is not a viable option for us or for future generations. Stopping rising costs is a tough task which has been tried by both political parties to no avail.

What we need to do is rethink student loans.

A radical new idea has been proposed by some senators and a few private universities. The idea is known as Income-Sharing Agreements and were first proposed by Milton Friedman in 1955. Since then, the idea has evolved.

An Income-Sharing Agreement is fairly simple. A student would reach out to a private company which specialized in these agreements before their freshman year and submit their college of choice and degree they will be pursuing. For example, if after scholarships a student at ACU would still owe $20k per year, the company would loan them $10k each semester to cover the remainder of their balance. When the student graduated, they would owe that company a fixed percentage of their income based upon the job placement record of that university and the degree plan they had chosen. For example, someone with an accounting degree would owe 5 percent of their income over 10 years. Someone with an undergraduate degree that has lower chances for job placement compared to accounting, such as psychology or gender studies would owe a higher percentage of their income closer to 10 percent. It’s not that these degree paths are not important or that job placement is all that matters, it’s that these degrees generally require more education beyond an undergrad degree to be profitable.

If students reach or exceed their earnings potential after college, the company who had originally made the loan would come away with a profit which would offset those students who did not.

Whether you work as a waiter out of college or start with 6 figures, this percent wouldn’t change. It incentives colleges to produce degree programs with high job placement. It holds universities accountable and would also help with lowering costs as universities would cut programs which weren’t helping students find jobs.

Some universities have begun setting aside parts of their endowments for income sharing agreements. This benefits the endowment by potentially causing it to grow and by saving students from burdensome loans with high inflexible repayments.

The idea isn’t a perfect one, and I encourage you to look into it more, but I believe it is a better path forward than the current one we are on.