Our Student Freedom Agreement should be considered just one part of a student’s overall financial aid package. It is not designed to replace any state or institutional aid, or any federal grants, work-study, or Direct Subsidized and Unsubsidized loans. Instead, a Student Freedom Agreement is available to cover a student’s remaining cost of attendance after those other aid sources are taken into account, as a potential alternative to private student loans and Parent PLUS loans.
Under our Student Freedom Agreement, the Student Freedom Initiative will provide funds to pay for a portion of an eligible student’s educational expenses. In return, the student agrees to make monthly payments to the Initiative in the future that are based on what they earn after leaving college. The Student Freedom Agreement is structured as a ‘pay it forward’ program, we intend that donations and payments from students who receive funding under our Student Freedom Agreements, like this one, will create a virtuous circle that is self-sustaining for the benefit of future generations of students and their families.
As a program based in equity and community, the basic terms of the Student Freedom Agreement are the same across all participating schools and students.
Eligibility Requirements To be eligible to receive funding from us, a student’s school must be a participant in the Student Freedom Initiative program, and the student must meet all the following criteria immediately prior to the disbursement of funds (as determined and confirmed by student’s school):
(a) Completed a FAFSA or acceptable alternative state aid application that is accepted and approved by student’s school; (b) A valid Social Security Number; (c) Not an international student or foreign exchange student authorized to enter the United States on a non-immigrant visa; (d) Majority age or older; (e) Junior or senior for the school year being funded; (f) Enrolled full-time for the coming academic term (unless we grant an exception because student requires less than full-time enrollment to complete his/her bachelor’s degree in her/his final year of study); (g) Working towards a degree in an approved STEM major; and (h) Meeting satisfactory academic progress as defined by student’s school.
Funding Amount To ensure manageable payment obligations, funding for each student will be capped at $20,000 per academic year and $40,000 total.
Income Contingent In contrast to loans that require fixed dollar monthly payments over a fixed term, regardless of income (and are structured so that the lender gets back the amount the student borrowed and earns a return), our Student Freedom Agreement does not set a fixed dollar monthly payment obligation, and there is no obligation to pay back the full amount received.
Participants incur no obligation in years where they make less than 225% of the Federal Poverty Level for an individual in the 48 contiguous states and District of Columbia – currently $28,980 per year.
Monthly Payment After beginning to make monthly payments, participants would generally pay an amount equal to 2.5% of their income for every $10,000 in funding received from Student Freedom Initiative to cover future students. Income does not include pension payments, disability payments, alimony, unemployment benefits or any receipts that do not qualify as taxable income. Additionally, if participant attends Graduate School full-time, any Graduate School Stipends received are excluded from participant’s income.
Term The payment period under the Student Freedom Agreement generally starts on January 1st of the year after the participant graduates.The payment obligation ends after a maximum of 20 years, even if the participant has paid less than the amount received or nothing at all.
Rate Basis 10-year Treasury +4.3%
Fees and Penalties No late payment fees or penalties.
Payment Cap There is cap on how much a participant is required to pay, which provides protection for those that are high-earners. This payment cap is designed to make sure the overall cost of a Student Freedom Agreement remains lower than the cost of a Parent PLUS loan (paid over the same time period).
Additional Benefits and Protections Deferrals Participants can elect to defer up to 12 monthly payments for any reason, without the need to demonstrate hardship. Once all deferrals have been paid in full, participants can take up to 12 more deferrals. This cycle continues throughout the term.
Bankruptcy, Total Permanent Disability or Death – Obligation terminates.