To pay for college, Amy Wroblewski sold a piece of her future. Every month, for eight-and-a-half years, she must turn over a set percentage of her salary to investors. Today, about a year after graduation, Wroblewski makes $50,000 a year as a higher education recruiter in Winchester, Va. So the cut comes to $279 a month, less than her car payment.

If the 23-year-old becomes a star in her field, she could pay twice as much. If she loses her job, she won’t have to pay anything, and investors will be out of luck until she finds work.

Wroblewski struck this unusual deal as an undergraduate at public Purdue University in West Lafayette, Ind. To fund part of the cost of her degree in strategy and organizational management, she sidestepped the common source of money, a student loan. Instead, she agreed to hand over part of her future earnings through a new kind of financial instrument called an income-sharing agreement, or ISA. In a sense, financiers are transforming student debtors into stock investments, with much of the same risk and, ideally, return.

In Wall Street terms, Wroblewski, a first-generation college student, is more small-company stock than Microsoft. Her mother works as a waitress; her father, as a quality control inspector in a car dealership’s body shop. With a strong work ethic, Wroblewski always held down at least two part-time jobs in school, working as a Purdue teaching assistant... [ read more ]