What is Earnings-Backed Financing?

Jurna is offering a novel type of loan called Earnings-Backed Financing. The basic concept has actually been around for decades, and, most recently, has been in the news as a feature of President Joe Biden’s student loan reform package. Here’s how Jurna's earnings-backed loans work.

Jurna loans are meant to ease the burden of repayment by calculating the repayment total as a percentage of your future income. These types of loans have been around in some form in the past, under names like Income-Share Agreements (ISAs) or Income-Based Repayments (IBRs). IBRs are a key feature in Biden’s SAVE plan, which covers federal student loans. For a private Jurna loan, you will state various aspects of your academic profile, like your school, major, and GPA. Based on that information, Jurna’s proprietary financial modeling will offer you several options that vary in loan size and repayment terms. You should only choose the repayment terms – the percent of your future income you’re willing to pay, as well as the number of years you commit to pay back your loan – that you feel most comfortable with. (Don’t worry – a member of Jurna’s advisory staff will help walk you through the various options.)

Once you are approved and sign up for a Jurna loan – no credit score or co-signer required – you won’t be on the hook for repayment until you earn your first paycheck after graduation. You will be required to submit income verification and will go through your employer to make sure payments are made directly from your paycheck to Jurna, just like tax or other FICA withholdings. 

There are several safeguards to ensure that you won’t be making payments you can’t afford. For example, there’s a maximum effective APR, which is capped at 11%. There’s also a minimum income threshold of $35,000, meaning that if you make less than that or lose your job, you won’t be responsible for payments until you secure a job above that threshold. The same applies if you take a break from your full-time employment for grad school or a family emergency. Your repayment period will pause during that time and resume once you get a higher-earning job.

Additionally, if you happen to be wildly successful and start making a lot of money out of the gate, we don’t want to punish you for that. Therefore, you’ll have the option of repaying your loan back in full at any time at the maximum APR of 15%. And if at any point during your committed repayment period you hit that maximum APR, your commitment will be considered fulfilled and your payments will stop for good.

The reason we ask for things like major and GPA are because of our proprietary pricing model. As a Jurna scholar, you’ll be placed in a pool with similar students who have similar profiles with comparable job and income projections. That allows investors to fund your loans by investing in these pools. You won’t have any contact with these investors, and they won’t have any access to your data or individual information; they’ll just see the pools they’re investing in. 

Jurna’s unique pooling and pricing model allows us to offer private loans at better rates than other private lenders, and we believe that earnings-backed financing can be a healthy alternative to fund your education without saddling you with burdensome debt.