I appreciate the nuanced discussion in the slide deck as well!

5/ One caveat is that I only model the “stick” portion of the plan, but the plan also introduces a “carrot” in the form of PROMISE grants, which allocate dollars to institutions based on criteria including Pell grant volume and graduation outcomes for low-income students.

4/ Because the risk-sharing is for the lifetime of the loan, institutions could be responsible for paying a portion of students’ unpaid annual debt payments for 30 years or more after students leave the institution.

3/ The formula itself generates non-linear incentives in some cases. For example, increasing median completer income only matters for programs that would likely owe for their completer cohort.

2/ Because the implementation of the formula would be concurrent with a host of other changes to student lending, potential payments under this risk-sharing plan are difficult for institutions and programs (and researchers!) to predict.