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Are Income Share Agreements a Good Student Loan Alternative?

by | Oct 9, 2020

Some 44 million Americans collectively hold over $1.6 trillion in student debt – and that number has been growing. With more Americans in student debt than ever before, it’s hard to imagine there are alternatives to the traditional loans most students are used to seeing. Once scholarships and Federal loans are exhausted, where do you turn next? Private loans are the usual fall-back, but they may have much higher interest rates. Additionally, if you ever have to claim bankruptcy, the loans still stay.

In a recent article from CNBC:

“As tuition and fees continue to increase at both public and private institutions, students’ debt loads are rising along with them. Over the past 20 years, college costs have grown at over three times the rate of inflation. The result: 70% of college graduates have student debt, with the average borrower owing more than $37,000 at graduation.”

America is in the midst of a student debt crisis – there’s no denying that. Many students are forced to take out private loans in order to complete their education, and recent graduates are struggling to find jobs. Are there any other options available? Is higher education tied to loans indefinitely? One might think, “There has to be some other form of financing. Something that’s more flexible than private loans.”

Enter the Income Share Agreement (ISA). ISAs are not loans. ISAs are a low-cost financing option that works as an alternative to traditional student loans. In an ISA, students pay a percentage of their future income for a fixed period of time, up to a maximum amount. Students do not pay unless they find a job and reach the minimum income threshold.

A few quick points about ISAs:

  • ISA payments adjust according to levels of income – a true outcome based model!
  • Monthly payments are calculated by applying the students income share rate to their total monthly earned income.
  • ISA obligations can be ended earlier by making early payments as listed in an early payment schedule.

ISAs aren’t just for undergraduates, either – adult learners and non-traditional students – are just as eligible to apply for ISAs as well. Whether you’re a professional looking to skill-up through a bootcamp, or someone who wants to learn code to make a living, an ISA can help with funding.

With our ISA program, you’re not just getting flexible financing, you’re getting access to the Talent Accelerator Platform (TAP), a custom-made, wrap-around career enhancement program made specifically for students and job-seekers of all levels. By offering 6 core modules catered to building your core professional competencies, the TAP helps build your personal brand, resume and cover letters, negotiation strategy, and much more. We also offer live webinars which can give candidates real-time access to the ever-changing job market!

If you’re a student, a parent of a student, or a job-seeker looking for a career change and need help with financing your education, check out our ISAs.

Wondering what the real differences are between an ISA and a traditional loan? Check out Kathik Krishnan’s (our CEO) post: Student Loans Are Also Income Share Agreements BUT Tax Low Earners More!