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Rising student debt across the country is becoming harder to manage and even harder to justify. As of April 2025, were 90+ days behind on payments, with by September. These numbers reflect a system still built around a one-size-fits-all model, offering little flexibility even as students’ outcomes and earning potential vary widely.

That’s why some institutions are rethinking how student financing works, designing models that are more responsive to real-life outcomes and reduce the financial burden on learners. At Western Governors University (±¬ÁϹ«Éç), for instance, student borrowing has declined by nearly 30% over the past decade (compared to the national increase of ). This shift is driven by a combination of lower tuition, responsible borrowing initiatives and now, alternative financing programs.

Still, these kinds of improvements remain the exception, not the norm.

Why Better Borrowing Remains Out of Reach

For years, Direct PLUS Loans offered virtually unlimited borrowing, often at high cost and risk to families.  on Parent PLUS loans and the phase-out of Grad PLUS loans reflect growing recognition of that risk. But without more affordable alternatives in place, these changes could limit access for students and families with low- to moderate-income households.

Meanwhile, approaches designed to remove financial barriers (e.g. credit underwriting criteria) —such as Income Share Agreements (ISAs) which allow students to pay a fixed percentage of their future income for a set period—have . Such constraints limit alternative financial aid programs designed to make college more accessible. 

A System That Puts All the Risk on Students

Today’s system fails to align with actual student outcomes. Schools can charge high tuition regardless of whether their programs lead to meaningful career opportunities while students are left holding the financial burden either way.

Take, for example, a recent nursing graduate earning $40,000 in their first year. Under traditional repayment models, their monthly student loan bill may be nearly identical to someone earning $80,000. That disconnect is what leads so many borrowers to struggle, defer or default.

And in this system, institutions and private lenders face little consequence for poor outcomes. The risk is placed entirely on students and follows them long after graduation. 

A Smarter Way 

A range of innovative solutions are emerging, designed to reduce upfront costs, limit financial risk and better align repayment with outcomes. These include pay-it-forward loan funds, outcomes-based loans and income-contingent financing models. Institutions are already putting these models into action:

• provides income-based financing for historically marginalized college students, typically structured as ISAs. Students only make payments if they earn above a set income threshold (currently $48,000), with payments calculated based on earnings. BFF also partners with student support organizations to deliver wraparound support such as mentoring, advising, and academic coaching.

• provides alternative financing for students at Minority Serving Institutions (MSI). It replaces high-cost private education loans and Parent PLUS loans () with more flexible repayment tied to future earnings. SFI also provides wraparound support services like emergency grants, financial literacy, and internships (through their partner ), helping students succeed both during and after college.

Collectively, these programs are disrupting the federal student loan system and showing what’s possible when we rethink student aid from the ground up—replacing one-size-fits-all debt with innovative, outcomes-driven models.

The Path Forward

Across the country, institutions, nonprofits and employers are working together to advance alternative financing models. And these innovations aren’t limited to traditional degree programs. We’re seeing similar approaches extend to certificates, industry-recognized credentials, apprenticeships, and other work-based learning pathways, with organizations like Craft Education helping to bridge these opportunities. 

To truly move forward, we need to keep challenging the idea that student debt is inevitable. A more accessible and affordable system is not only possible, it’s already taking shape. And by expanding and supporting these models across all learning pathways, we can ensure more individuals have access to the education and opportunities they deserve without the cost of lifelong financial strain. 

Resources to Explore and Take Action

For Students:

• Check your eligibility for ±¬ÁϹ«Éç’s ReNEW Fund for nursing students

For Institutions:

For Employers:

• Partner with ±¬ÁϹ«Éç’s ReNEW Fund