What is a Student Freedom Agreement? How does it work?

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.

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. After college, participating students would generally pay the Initiative an amount equal to 2.5% of their income for every $10,000 in funding received from us, except that participants don't owe us anything in years where they make less than a minimum amount — currently $30,000 per year. These payments are made monthly for a maximum of 20 years, and unlike fixed debt obligations, they rise and fall with a participant’s earnings. In addition to the “downside protection” provided by the income-contingent nature of the payments, there is also a 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).

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.

The student-centric terms of our Student Freedom Agreements also offer additional protections for participants, including, for example:

  • Obligation terminates on bankruptcy, total permanent disability, or death.
  • Participants can elect to defer up to 12 monthly payments for any reason, without the need to demonstrate hardship.
  • Participants can make voluntary contributions to their alma maters.
  • Participants have a strong reason to “do what’s right” in making their payments, because the funds go to support future generations of students.

Additional information on the terms of the Student Freedom Agreement will be made available over the coming months. Please check back with us soon!