At Purdue University, some undergraduates will have a new option to help finance their degrees: pledging to pay a percentage of their future incomes in return for funds today. Such programs are not loans. Instead, students get funds to cover current education expenses, and, in return, they agree to pay a percentage of their future income over an agreed-upon period of time.

Though an emerging corner of the educational finance industry, such programs help ease the often crushing debt many American college students face after graduation, proponents say. A small number of lenders have tested the model in recent years, but Purdue is the first American university to officially embrace the concept.