Well, the difference is that you are not obligated to pay the loan back if you don't earn any substantial amounts of money. And if you have to pay, the amount is adjusted to your salary, so you can be sure that you can afford paying back. I'm not defending this actual offer, I haven't really looked at the specific terms. But in general I find this quite a compelling model. My alma mater in Germany, which was a private university, offered a similar model. Instead of tution (~42'000) you could choose to pay back 10 years 9% of your salary (if it exceeds a certain threshold), capped to 2x of the tution. Basically, it is a bet on your employability. It only works out if your graduates succeed in searching and keeping a job. Additionally the model gives to the gradudate the freedom to choose a job without looking at the salary, because the payback is adjusted to your salary. I think offering this option at American colleges would rather help, and generally I think its not usurious, and quite different to a loan. But then again it depends on the specific terms.