The United States allows its citizens to enter into income-participation agreements. In the 1970s, Yale University tried a modified form of Friedman`s proposal with several cohorts of students. At Yale, instead of entering into individual contracts for a fixed number of years, all cohort members agreed to repay a percentage of income until the balance of the total cohort was paid. However, the system left frustrated students paying more than their fair share by being forced to make payments on behalf of their peers who were unwilling or unable to repay their loans.  In the UK, this type of agreement has obtained final approval from the FCA (UK Financial Regulator) within a single regulatory framework. To date, StepEx is the only company to be a regulated ISA provider and to insure the loan with the funds of major UK financial institutions. At present, ISAs are only available in the UK for postgraduate degrees in the professional fields of top universities. This is a broader and more affordable alternative to debt for post-closing financing.  Since investors have an incentive to allow students to pay lower shares of their income when enrolling in quality and low-cost education programs, ASAs contribute to a more efficient allocation of financial resources among higher education institutions.  [In the case of a regular student loan], my nominal monthly payment is fixed, but my income could change or disappear completely (which is sure it`s just a monthly repetition of bad news).
In the case of an income participation agreement, it`s the opposite: I don`t know what my monthly nominal amount will be over the entire term, or how much I`ll pay in total, but I know I can still afford it.  Profit-sharing agreements are characterized by a percentage of future revenues for a given period. They can function as non-voting shares in a company where the individual student is treated as a business. In the U.S. system, this usually involves the investor transferring funds to a person in exchange for a fixed percentage of their future income.   Other features of income participation agreements may be (a) a fixed duration of income participation (b) an income exemption if the borrower does not owe below a certain income and/or (c) a buy-back option under which the borrower can pay a set royalty to leave the contract before full maturity. Some ISA investors offer different conditions to different students depending on their likelihood of success, while others offer the same conditions to all students. Potential investor groups could be for-profit companies, altruistic nonprofit organizations, alumni groups, educational institutions, and local, state, or federal governments.