TrendsVC PRO 0004 – Income Share Agreements

Teacher

Income Share agreements (ISAs), which allow students to pay school fees from future earnings, are called “share agreements”. Repayment depends on student success. File size: [1 Report (PDF)] Format File: [1 Report (PDF)]

TrendsVC PRO 0004 – Income Share Agreements

Problem
Schools are paid regardless of whether students succeed.
Solution
Income Share agreements (ISAs), which allow students to pay school fees from future earnings, are called “share agreements”. Repayment depends on student success.
There are both aligned ISAs and misaligned ISAs. Aligned ISAs are linked to the success and success of schools and students. Misaligned ISAs are similar to traditional loans, shifting the downside risk to students.
Terms may vary. Details are the devil.
ISA terms can include a minimum salary to repay, a repayment cap and a salary percentage.
This problem could be exacerbated if ISAs are not aligned properly. An example: an ISA that has no minimum salary and no forgiveness period.
Players
Schools (offering ISAs)
Lambda School
General Assembly
Flatiron School
App Academy
Pathrise
Kenzie Academy
Purdue University

Download immediately TrendsVC PRO 0004 – Income Share Agreements
University of Utah
Colorado Mountain College
Lackawanna College
ISA Providers
Align
ISA Platforms
Edly
Vemo
Lumni
Blair
Avenify
Leif
Predictions
Schools will be influenced by companies if they are created or partnered with them. (See Kaiser Medical School).
Students with traditional loans will prefer schools offering aligned ISAs. Students will see better results when they have aligned incentives.
Only students who are pursuing high-demand skills will be eligible for aligned ISAs. Sharing the risk eliminates the moral hazard that expensive loans are not likely to be repaid.
Schools that have aligned ISAs are the best for salary negotiation and interview preparation.
Special interest groups will push to keep ISAs open for business. For more information, see payday loans.
Investors will push ISAs that are not aligned with their goals, such as ISAs with high minimum salaries and low payment caps.

Download immediately TrendsVC PRO 0004 – Income Share Agreements
The IRS will treat ISA payments as student loan interest payments.
‘Promising’ Students will receive lower terms for their salary percentages.
☁️ Opportunities
To help students choose a career, create an aptitude test
Become an Investor on ISA Platforms
Take a look at ‘ISA vs Loan Calculator’ Students can use the Purdue Comparison tool to help them choose which route they want to take.
Publish a list ISA program from best-to-worst based on interest alignment
Incorporate a high-reward ISA program.-Skills are in high demand
Haters
“This is predatory.”
Many would agree with traditional loans. Regardless of whether students succeed, most schools get paid. ISAs spread risk between school and student. Traditional loans shift the downside risk to students.
“Students that make more, pay more.”
Students might make more because they have similar interests. These outcomes can be separated. If so, you should attend a traditional school.
“This is indentured servitude.”
This is an inaccurate term that can be loaded. Both traditional loans and ISAs can be created under predatory terms.
Links
Income Share Agreements (ISAs) — James Gallagher
How Income Share Agreements Work — Austen Allred
ISAs: The Solution to Student Debt? — a16z
Income Share agreements: A solution for medical school debt? — Jordan Hughes
The new student loan type offers significant support. Is there a downside? — Kevin Carey
The Ultimate Guide to Income Sharing Agreements — Robert Farrington
Life Capital — Erik Torenberg