Income Sharing Agreements (ISAs)

An income sharing agreement (ISA) is a financing arrangement in which a student agrees to pay a percentage of their future income to a lender or financing organization in exchange for funding to pay for their education or training. ISAs are often used as an alternative to traditional student loans, as the student does not need to make payments until they begin earning an income and the amount they pay back is tied to their income rather than a fixed amount. For instance, a university may pay for a $10,000 tuition upfront, and the student agrees to pay back a fixed percentage (such as 6%) of their income for a set period of time (such as 10 years). If the student earns $40,000 in their first year after graduating, they would pay $2,400 per year or $200 per month. As the student’s income increases, their payment will also increase. However, if their income decreases, such as during a period of part-time work, their payment will also decrease. Many ISAs also have minimum income requirements and repayment caps to protect the student from excessive payments.

ISAs may be offered by schools, training programs, or private organizations, and the terms of the agreement, including the percentage of income that must be paid back and the length of the repayment period, can vary. Some ISAs may also have caps on the total amount that must be repaid so that the student is not required to pay more than a certain amount even if their income is very high.

It’s important to carefully consider the terms of an ISA before entering into one, as the terms can have a significant impact on your financial situation in the future. It may be helpful to compare the terms of an ISA to those of traditional student loans or other financing options to determine which option is the best fit for your needs.

Student loan debt has become a significant issue, particularly for those who have graduated and are unable to secure high-paying jobs. One potential solution that has gained popularity is income-sharing agreements (ISAs). These agreements function similarly to loans, but instead of repaying a fixed amount, students pay a percentage of their income for a predetermined period of time. Although ISAs may seem like a favorable alternative to traditional student loans, it is important to be aware of the potential risks involved.

Differences between an Income Sharing Agreement (ISA) and a Student Loan:

There are several key differences between an income-sharing agreement (ISA) and a student loan:

Repayment terms: With a student loan, you are required to make fixed monthly payments for a set period of time, regardless of your income. With an ISA, you only make payments when you are earning an income and the amount you pay is based on a percentage of your income.
Interest: Student loans typically accrue interest over time, which means that you will end up paying back more than the original amount you borrowed. ISAs do not accrue interest, so you will only pay back the agreed-upon percentage of your income.
Credit score: Obtaining a student loan often requires a good credit score, as lenders use credit scores to assess risk. ISAs do not typically require a credit check, so they may be an option for those with less-than-perfect credit.
Risk: With a student loan, you are responsible for repaying the full amount regardless of your income or employment status. With an ISA, the risk is shared between the student and the lender, as the student only needs to pay back a percentage of their income.

While income-sharing agreements (ISAs) and student loans both involve receiving funding for education upfront and repaying that money in the future, there are significant differences between the two. An ISA is more similar to a tax than a loan, as you pay a fixed percentage of your income rather than a set amount that can be paid off quickly to reduce the total cost. In this way, an ISA is tied to your income rather than a fixed payment schedule.

It’s important to carefully consider the terms of both options before deciding which one is best for you. It may be helpful to compare the terms of an ISA to those of a student loan to determine which option is the most financially feasible for your needs.

Income Sharing Agreement Pros and Cons

Pros of Income Sharing Agreements (ISAs):

No upfront cost: With an ISA, you do not need to pay any money upfront to cover the cost of tuition. This can be especially beneficial if you do not have the financial resources to pay for your education out of pocket.
No interest: ISAs do not accrue interest, so you only pay back the agreed-upon percentage of your income rather than a higher amount due to interest.
No credit check: ISAs do not typically require a credit check, so they may be an option for those with less-than-perfect credit who may not be able to qualify for a student loan.
Flexible repayment: With an ISA, you only make payments when you are earning an income, and the amount you pay is based on a percentage of your income. This can be especially helpful if you experience a period of low income or unemployment.

Cons of Income Sharing Agreements (ISAs):

Uncertainty: With an ISA, you may not know exactly how much you will be required to pay back until you begin earning an income. This can make it difficult to budget and plan for the future.
Risk: If you are unable to secure a high-paying job or if your income remains low, you may end up paying more under an ISA than you would with a student loan.
Limited availability: ISAs are not as widely available as student loans, so you may not have as many options if you are considering this type of financing.
Lack of protection: Federal student loans come with certain protections, such as deferment and forbearance options, that may not be available with an ISA.

It’s important to carefully consider the pros and cons of an ISA before deciding whether it is the right financing option for you. It may be helpful to compare the terms of an ISA to those of a student loan to determine which option is the most financially feasible for your needs.

When to Consider an Income Sharing Agreement

There are a few situations when you may want to consider an income sharing agreement (ISA) as a financing option for your education:

You don’t have the financial resources to pay for your education upfront: If you don’t have the money saved up to cover the cost of tuition or you don’t want to take out a student loan with a large upfront cost, an ISA may be a good option.
You have less-than-perfect credit: If you have a low credit score or limited credit history, you may not qualify for a student loan. In this case, an ISA may be an option as it does not typically require a credit check.
You are not sure what you want to study: If you are unsure what you want to study or you are considering a program that may not lead to a high-paying job, an ISA may be a good option as you only need to pay back a percentage of your income rather than a fixed amount.
You are willing to take on some risk: With an ISA, you are taking on some risk as your payments are tied to your income. If you are willing to take on this risk in exchange for the potential benefits of an ISA, it may be a good option for you.

It’s important to carefully consider the terms of an ISA before deciding whether it is the right financing option for you. It may be helpful to compare the terms of an ISA to those of a student loan or other financing options to determine which option is the most financially feasible for your need.

Income Sharing Agreements Companies

Stride Funding:

Stride Funding is a company that offers income sharing agreements (ISAs) as a financing option for education and training programs. Under a Stride Funding ISA, students receive funding upfront to cover the cost of tuition or other educational expenses, and in exchange, they agree to pay back a percentage of their income for a set period of time. Stride Funding partners with schools, training programs, and other organizations to offer ISAs to students.

Stride Funding provides income sharing agreements (ISAs) to students at the undergraduate, graduate, and post-baccalaureate level. Through Stride Funding, you can borrow between $5,000 and $25,000 per year, with a maximum total borrowing limit of $50,000. The average repayment term for a Stride Funding ISA is 5 to 7 years, and there is a payment cap of 2 times the amount borrowed.

It’s important to carefully research and compare the terms offered by different ISA providers, including Stride Funding, before deciding which one is the best fit for your needs. It may be helpful to consider factors such as the payment percentage, repayment period, minimum income requirement, and repayment cap when comparing ISAs.

EDLY:

Edly is a company that provides income sharing agreements (ISAs) to undergraduate students in the STEM (science, technology, engineering, and mathematics) and nursing fields. Through Edly, you can borrow up to $10,000 per year, with a maximum total borrowing limit of $20,000. The average repayment term for an Edly ISA is 2 to 8 years, and there is a payment cap of 2 times the amount borrowed. However, Edly offers incentives for early repayment, so if you are able to repay the ISA within 3 years, you may only be required to pay 1.3 times the amount borrowed.

There are several companies that offer income sharing agreements (ISAs) as a financing option for education or training programs:

Vemo Education: Vemo Education partners with universities and other institutions to offer ISAs to students. Vemo provides the funding upfront and students pay back a percentage of their income for a set period of time.
Upstart: Upstart offers ISAs to students and also provides funding for personal loans. Upstart uses artificial intelligence to assess risk and determine the terms of its ISAs.
Pave: Pave offers ISAs to students and also provides funding for other types of personal loans. Pave uses data analytics to assess risk and determine the terms of its ISAs.
Lumni: Lumni is a global organization that offers ISAs to students in the United States and other countries. Lumni provides the funding upfront and students pay back a percentage of their income for a set period of time.
LendEDU: LendEDU is a marketplace that connects students with lenders who offer ISAs. Lenders on the LendEDU platform include Vemo Education, Pave, and Upstart.

It’s important to carefully research and compare the terms offered by different ISA providers before deciding which one is the best fit for your needs.

Income Sharing Agreements Schools

There are a number of schools and institutions that offer income sharing agreements (ISAs) as a financing option for their programs:

Purdue University: Purdue University’s “Back a Boiler” ISA program offers ISAs to students in certain STEM fields. Students receive funding upfront to cover the cost of tuition and other expenses, and in exchange, they agree to pay back a percentage of their income for a set period of time. With this income sharing agreement, you can borrow up to $10,000. You will be required to pay 3.11% of your income for a period of 100 months.
Colorado Mountain College: Colorado Mountain College offers ISAs to students in certain programs through its “Income Share Agreement (ISA) Pilot Program.” Students receive funding upfront to cover the cost of tuition and other expenses, and in exchange, they agree to pay back a percentage of their income for a set period of time. With this income sharing agreement, you can borrow $3,000 per year for a period of 60 months. You will be required to pay 4% of your income, but if you earn less than $30,000 per year, you will not be required to make any payments.
New York Code + Design Academy: New York Code + Design Academy offers ISAs to students in its coding and design programs. Students receive funding upfront to cover the cost of tuition and other expenses, and in exchange, they agree to pay back a percentage of their income for a set period of time.
Providence College: Providence College offers ISAs to students in its “Providence College Bridge to Success” program. Students receive funding upfront to cover the cost of tuition and other expenses, and in exchange, they agree to pay back a percentage of their income for a set period of time.

University of Utah: The University of Utah’s “Income Share Agreement” program offers ISAs to students in certain programs. Students receive funding upfront to cover the cost of tuition and other expenses, and in exchange, they agree to pay back a percentage of their income for a set period of time. Under this income sharing agreement, you will pay 2.85% of your income for a period of 3 to 10.5 years, depending on the amount borrowed. Funding of $3,000 to $10,000 is available to cover any gaps in funding.
Lambda School: Lambda School is an online coding school that offers ISAs to students in its programs. Students receive funding upfront to cover the cost of tuition and other expenses, and in exchange, they agree to pay back a percentage of their income for a set period of time. Under this income sharing agreement, you will be required to pay 17% of your income for a period of 24 months. No payments are required unless you earn at least $50,000 per year. The ISA will expire after 60 months, regardless of your income or repayment status. You will never be required to pay more than $30,000.
Holberton School: Holberton School is a software engineering school that offers ISAs to students in its programs. Students receive funding upfront to cover the cost of tuition and other expenses, and in exchange, they agree to pay back a percentage of their income for a set period of time.
University of the People: University of the People is an online university that offers ISAs to students in certain programs. Students receive funding upfront to cover the cost of tuition and other expenses, and in exchange, they agree to pay back a percentage of their income for a set period of time.
Messiah College: Under this income sharing agreement, you will only be required to make payments if you earn at least $25,000 per year. You can borrow up to $5,000 per year and will be required to pay 3% of the borrowing amount for a period of 84 months.
Make School: This income sharing agreement offers full or partial funding, and requires you to pay 20% of your income for a period of 30 to 60 months. No payments are required unless you earn $60,000 or more. There is also an option for a living assistance ISA, which provides $1,500 per month during school and requires a repayment of 5% to 7% of your income for 10 years.
Lackawanna College: Under this income sharing agreement, you will only be required to make payments if you earn at least $20,000 per year. The repayment period is set at five years, and there is a cap on repayment (meaning that when you have repaid twice the amount borrowed, you are no longer required to make payments). The percentage of income required for repayment is not publicly available.
Clarkson University: This income sharing agreement offers funding of up to $10,000 per year and requires you to pay 6.2% of your income for a period of 10 years. Admission to this program is competitive, with only 20 students accepted per year.

This is not an exhaustive list of schools that offer ISAs. It is important to carefully research and compare the terms offered by different schools and institutions before deciding which one is the best fit for your needs.