An Income Share Agreement (ISA) is funding for higher education in exchange for a percentage of your income if and once you land a decent job.
As students seek to avoid huge amounts of student loan debt, ISAs are becoming increasingly common. For some, they’re a no-brainer. An ISA, for example, could help fill in the gaps for financial aid if you’ve reached federal borrowing limits or are attending a school that’s ineligible for federal or private loans. They are also ideal for students looking to upskill using a Bootcamp or specialty school where they might not have a traditional means of funding.
In some cases, ISAs are available directly from your school, who partner with companies, such as Meratas, to administer and organize the ISA. But in other cases, it may be more difficult for you to find an Income Share Agreement if your school does not directly offer one. If you’re interested in comparing your options, here are different ways to secure funding for your degree through an ISA.
Schools That Offer Income Share Agreements
All sorts of schools are joining the ISA game, including traditional 4-year colleges and universities, online-only educational institutions, and a variety of bootcamps and career training programs. Although this isn’t an exhaustive list, this will highlight some key ISA programs offered across the U.S.
Through its Back a Boiler - ISA Fund, Indiana’s Purdue University offers ISAs as a supplement - not a replacement - for traditional student loans. Eligibility is limited to non-freshman students who have exhausted their federal loans for the academic year and are considering private loans or asking their parents to borrow a Parent PLUS Loan. To qualify, students must have no significant negative incidents, such as wage garnishment or bankruptcy, listed on their credit report.
Nearly 800 students have received $9.5 million in funding through the program, according to the school. It caps each student’s repayment at two and a half times what they initially received. You could use the school’s ISA comparison tool to estimate your dues.
Lackawanna College, a private institution in Pennsylvania, reserves its ISA for covering remaining tuition costs after borrowing federal student loans. The program is available to students who sport at least a 2.5-grade point average and are pursuing select majors.
Lackawanna's alumni who take part in an ISA enjoy a federal loan-like, six-month grace period before they start paying an agreed-upon percentage of their income for the following five years or so. At the end of those years, the participant no longer owes anything, even if they haven’t repaid as much as they originally received.
Clarkson University’s donor-funded ISA program is competitive, available to only 20 students per year. The private upstate New York university disburses up to $10,000 per student per school year. Members of the 2018 class who receive a four-year ISA, for example, would get $40,000 and then repay 6.2% of their income for 10 years.
About 97% of Clarkson graduates find work in their fields after graduation, according to the school.
Messiah College, a private Christian school in central Pennsylvania, started its pilot ISA program in June 2018 for undergraduates. Messiah offers $5,000 per year and the payment cap is 1.6x the ISA amount that students take out. Messiah students in an ISA would be expected to repay 3-3.5% of their income for 84 months once their earnings surpass $25,000 annually.
In the pilot phase of its ISA, the University of Utah’s Invest in U program is limited to undergraduates who are within one year of collecting their diploma and are pursuing one of 18 majors. After accounting for gift aid like grants from your state and scholarships, these students could receive between $6,000-$20,000 per academic year.
Depending on each student’s major and the amount received, they could expect to repay 2.85% of their employer’s paycheck for between 3-10.5 years. However, they can defer their income payments while they earn less than $20,000 or attend graduate school. Check out the university’s ISA comparison tool to measure its usefulness for your situation.
Officials at Colorado Mountain College had a specific goal in mind when the school launched its ISA program in 2018: help undocumented students pay for college. CMC’s tuition per year is $2,400, so their ISA program offers $3,000 per year.
Depending on each student’s situation, they could expect to repay 4% for 60 months once they are earning $30,000 (or sooner if a student pays back the total amount of the funds they received before 60 months), and the great thing about this ISA is that students don’t pay more than the amount of ISA that they take out.
Norwich University in Vermont became the only military college of its kind to provide an ISA option to its sophomores, juniors, and seniors, rolling out the program in the fall of 2018.
You’d have to be comfortable giving back some of your salary to attend Norwich. By 2019, 48% of the graduating class of 2017 was employed - 38% of whom worked in the military, according to the school.
Lambda School has built a curriculum designed to get you hired. They asked hundreds of top tech companies what specific skills they look for in candidates and then designed their lives and remote programs to include learning activities that help you master each key skill.
With Lambda’s ISA, they cover all of your $30,000 tuition in exchange for 17% of your income for 24 months, but you only start making monthly payments once you’re earning $50,000.
For some entering the computer science field, ISAs can prove useful. Many coding bootcamps and schools aren’t eligible for federal student aid in the first place, so ISAs are a way to fill the void of funding.
That’s the case at Make School, which claims to be the first start-up-style school to offer bachelor’s degrees in applied computer science. Here, you could finance your education with either a partial ISA (worth $35,000) or full ISA ($70,000): With a partial ISA, you repay 20% of your gross salary for 30 months. With a full ISA, you repay 20% of your gross salary for 60 months.
The school also offers a $1,500-per-month ISA for living costs that would be repaid from 5 to 7% of your income over 10 years.
Companies That Offer Income Share Agreements
A company that offers ISAs means that any student can apply with them and use those funds for any school, regardless of whether that school offers an ISA. You would apply with the company for a certain ISA, they would then disburse those funds to you, and then you could use those funds for your school or program. For now, only a few private companies provide ISAs directly to students - Blair, Lumni, and Align are among them - although more are expected to join. Edly and Tradeup also provide direct to consumer ISAs.
As you review these ISA providers, compare terms such as income threshold and repayment cap, just as you’d judge student loans by their interest rate and repayment term. By looking at the income share terms, you can help ensure you land an ISA with the company that best fits your needs.
What if My School Doesn’t Offer an ISA?
If you’re unmoved by existing income share agreement providers, you could always take on the challenge of convincing your school to start its own program. If you think your school or program should offer an ISA option, we’d love to hear from you. Let us know here!
Ensure an ISA is a long-term plan for your degree
If you like the idea of an ISA - either as a way of borrowing less than private student loans or avoiding debt altogether - check in with the schools above. Although this list is not extensive, if none of these schools line up with your plans, check out our student's page for a list of even more schools. (Please note these ISA statistics are as of August 2020 and are subject to change in the future.)
Before you decide, however, note that not all jobs or training paths are the correct ones for an ISA - take a look at our suggestions for some fields that are a better fit for this type of funding.
If an ISA sounds intriguing, take a look at some of the pros and cons. Interested in more ISA programs? Check out our student’s page for a full list of schools and programs offering an ISA through Meratas!