Win-win student financing

Student loan debt is the second highest consumer debt category with $1.3 trillion in loans outstanding. Beyond the direct threat of a student loan crisis, a highly indebted postgraduate population has longer term implications on the economy. These graduates are faced with the reality of servicing these loans for years after graduating, an expense that can delay life events like homeownership.

At the same time, universities have increased their budgets for discounted tuition that allows them to improve enrollment and make their programs more affordable. With tuition increases stabilizing, universities are no longer able to sustain these discounting programs. The Vemo Education team is providing a new option for students and universities based on years of experience in higher education at Sallie Mae, Blackboard, and Georgetown University.

We are excited to be an early investor in Vemo Education, a company that aims to align the cost of college with the value of the education. Vemo partners with schools to structure and service financing alternatives such as income share agreements (ISAs). ISAs allow students to pay an agreed upon fixed percentage of their income after graduation for a predetermined period of time. By providing schools a new source of revenue, Vemo can extend the financial aid offered and make discounting programs sustainable.

Vemo helped develop Purdue University’s ISA program, Back A Boiler (referring to the school’s nickname Boilermakers). The effort was spearheaded by President Mitch Daniels, a vocal champion of ISAs that has testified before US Congress on the subject. This marquee partnership has validated and strengthened the reputation of ISAs.

Because of its position as a first mover in the space and role in developing the most prominent ISA program, Vemo has attracted a pipeline of educators interested in offering this option to students. These educators include universities as well as competency-based educators like code schools. Vemo powers ISAs that align students and educators, putting the focus on skills development and job placement.

In a skills-based economy, we need to ensure our workforce is trained to fill the jobs in the highest demand. Traditional universities will certainly continue to have a role in preparing the workforce. However, as the global economy continues to evolve, workers will have to constantly upskill and retrain in order to compete. This will create a demand for innovative skills-based models — such as code schools — that will help bridge the economy’s jobs and skills mismatch.

This cost of continuing education can become a burden if there isn’t an adequate return on investment. With financing alternatives available through Vemo, students can have comfort that the educator is focused on teaching valuable skills that lead to job placement. We’re excited to partner with the Vemo team and look forward to working with them as they make education more accessible and outcome-driven.