To the extent they have been used in higher education previously, ISA models have been strictly between private investors and students. In this case, however, the Purdue endowment is fronting the money and sharing in the risks. If a student struggles to secure a job after graduation or earns less than $20,000 per year, the college would collect no money. If a student is extraordinarily successful financially, Purdue could be paid back up to 250 percent of the amount originally awarded.

“These college-backed ISAs have the brand of the college behind them, and it’s the college saying that ‘We believe in our programs, we believe in our education, and we believe you’ll be better for it as a cohort,’” said Zakiya Smith, the strategy director of the Indiana-based Lumina Foundation and a former senior policy adviser for education in the Obama White House. “It’s essentially colleges putting their money where their mouth is.”

Purdue is the first institution to take on ISAs since an attempt by Yale University in the 1970s that was, in the words of one higher-education policy expert, “an utter disaster.”

“Part of that was obviously their design. They had done it on a cohort basis,” explained Ben Miller, the senior director for postsecondary education at the Center for American Progress. “Everyone had to pay back until the cohort paid back everything.” Because individual students were allowed to pay back the amount each had agreed to early while the cohort overall was required to meet a set target for investors, high-earners prepaid early, low-earners skated, and middle-earners were saddled with the burden of paying back investors.

At Purdue, no ISA recipient is required to pay more or less based on the earnings of another member of the cohort. This program represents a new way to administer ISAs, and those involved are well aware of their guinea pig status. This year, the university distributed just over $2 million—a relatively modest amount—to about 160 juniors and seniors in 79 unique majors. Next year, the program will expand to support sophomores.

There is a great deal of curiosity about the concept, and even policymakers and academics who have been skeptical of ISAs are eager to see what comes of this experiment. Daniels says Purdue won’t hesitate to share its findings: “We’re a public university; we love to do research and make it available.”

Mike Konczal, a fellow with the Roosevelt Institute, said he is curious to see the results of Purdue’s program. He did express concerns that the endowments running these ISA programs might be compelled to maximize returns with little incentive to lower the overall cost of tuition in general. He also emphasized that, although not traditional debt, ISA recipients “still have a monthly payment due, and if you’ve gotten into weird hardship, you’re still in as much trouble as you were before. And, if you take time to raise your kid, the thing goes into deferment, so suddenly it’s pushed into your 30s.”