Return of a boiler, Controversial Purdue University Revenue Sharing Agreement Programhas been paused.
A message posted quietly on the university’s website indicates that the program is not available for the 2022-23 school year. The program, championed by Past President of Mitch Daniels Universitywas recently criticized for practices deemed illegal by an advocacy group.
In the agreements, the students promise a share of their future earnings for a specified period. They are controversial for what, for many borrowers, equates to extraordinarily high interest rates and astronomical prepayment penalties. Many borrowers end up paying back more than 2.5 times what they originally borrowed.
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Earlier this year, the Student Borrower Protection Center sent a letter to the US Department of Education and the Consumer Financial Protection Bureau, asking them to intervene.
Speaking to IndyStar last month, Ben Kaufman, director of research and investigations at the Student Borrower Protection Center, said recent communications from both agencies make it clear that what Purdue is doing with the Back a Boiler program is wrong.
“We’re explaining that we think pretty clearly why it’s risky for people, why it violates the law, and why (the education department) can and should use the very robust tools already at their disposal to curb this practice,” he said. said Kauffman, “And basically put everything on the table until Purdue loses access to Title IV funds.”
Title IV is part of the Higher Education Act that allows students to access federal financial aid. Losing access would be “catastrophic,” Kaufman said.
Purdue did not immediately respond to a request for comment Friday, but has previously denied any allegations of wrongdoing.
It was the first major research university in the nation in the modern era to offer a Revenue Sharing Agreement (ISA) program – something that had largely been relegated to non-degree-granting entities, such as computer coding boot camps.
While Purdue marketed the Back a Boiler program as an alternative to private student loans, the CFPB said revenue-sharing agreements are private student loans. The federal agency responsible for consumer protection in the financial industry recently cracked down on another ISA provider for falsely claiming that its ISAs are not loans and do not create debt.
That prompted the U.S. Department of Education to remind colleges and universities nationwide of rules about how they can interact with private student loan and credit products — rules that the Student Borrower Protection Center says make unlawful the actions of Purdue.
Last month, five Purdue graduates and their families spoke to IndyStar and said they felt duped by the program and the way Purdue marketed it. They said they did not know the investors were hedge funds and other institutional investors. The families said they were told they were Purdue alumni, wanting to give back and help the next generation of Boilermakers.
The program, which launched in 2016, was available to students from their second year. According to the university’s website, more than 1,600 Back a Boiler contracts have been signed. Purdue enrolls approximately 10,000 new students each year and serves nearly 50,000 students each year.