Private equity titan Tony James, the executive vice chairman of The Blackstone Group, is taking on the student loan crisis by advocating for an alternative to traditional student loans.

The 67-year-old investor is a supporter of something called an Income Share Agreement (ISA). Here's how it works: In exchange for an education, students agree to pay a set percentage of their income after graduation for a certain period.

"Our thinking is to put a floor on it, so people who are low-income don't have to pay anything," James told Yahoo Finance. "The income percentage will be affordable for anyone. Even if you're just barely over the floor, it doesn't cost you much, and if you make a lot of money you pay a little bit more for your education, but you can afford it."

James set up the Education Finance Institute and brought on Jim Runcie, the former COO of the Office of Federal Student Aid and a long-time investment banking veteran, as its executive director and president to explore how an ISA can be more widely adopted.