Income Share Agreement: Market

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ISA: Total Number in 2018

About 1,000 Income Share Agreements (ISA) were made in the 2017-2018 academic year in the US.

General Information about ISAs

  • The basic idea of ISAs was launched in the 1950s by economist Milton Friedman but did not succeed at the time.
  • The ISA is mostly seen in colleges and universities. It is an agreement which involves the student and institution, whereby the institution provides funds to the student to support his/her education, and the student pays the fund over agreed number of years.
  • The ISA is usually done per academic year.
  • ISA is not very well-known in the US as a source of secondary education finance.
  • A study conducted on 400 college students and parents in 2017 concluded that only 7% of students and 5% of parents were aware of ISA existence.

Colleges and Institutions offering ISA

  • Colleges that have launched ISAs programs in the US since 2016 are Purdue University, Colorado Mountain College, Lackawanna College in Pennsylvania, Clarkson University in New York, Norwich University in Vermont, and Messiah College in Pennsylvania.
  • Purdue University's ISA scheme is the most famous after it created the "Back a Boiler Income Share Agreement Fund in 2016."
  • Clarkson University only offers about 20 ISA spots every year.
  • Some coding bootcamps also offer ISA as an option to finance studies.
  • MissionU, a vocational scheme also offer ISA.

Outlook for ISAs

Number of ISAs in 2017-2018

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  • "Since this alternative is still relatively unknown (only about 1,000 students have signed up for ISAs at US colleges), experts believe it’s still too early to peg this as a solution to the student-debt crisis."
  • "Only about 1,000 students have signed for ISAs at US colleges, based on Kelchen’s estimates (although more are enrolling through short-term coding “bootcamps” and vocational programs such as MissionU)."
  • "Four-year universities like Purdue are using them as a way to show their commitment to students as much as reduce their financial burden. The school’s program, Back a Boiler (an abbreviation of the nickname for the student body known as Boilermakers), is offering 175 students almost $2 million in ISA funding. "
  • "Braun estimates that today’s ISA market of $50 to $150 million should “increase exponentially” to billions of dollars over the next 5 years."
  • "Just as important for ISAs will be students knowing about them. A 2017 American Enterprise Institute study of 400 college and high school students and parents found just 7% of students and 5% of parents even knew ISAs existed."
  • "To date, there are 759 contracts with students enrolled in Back a Boiler who have received funding totaling $9.5 million. All Purdue colleges and more than 120 majors are represented in the student participation. The top six colleges represented are: Engineering, Polytechnic Institute, Health and Human Sciences, Liberal Arts, Krannert School of Management and Agriculture."
  • "Since 2016, other colleges and universities that have launched ISA programs include Colorado Mountain College, Lackawanna College in Pennsylvania, Clarkson University in New York, Norwich University in Vermont and Messiah College in Pennsylvania."
  • "ISAs will continue to grow as an option to students and universities looking for way to make higher education more affordable and accessibl"
  • "AS CONCERNS MOUNT OVER rising student debt loads, income-share agreements have attracted attention as a possible funding alternative for students and families. These aren't new – economist Milton Friedman developed the basic ISA framework in the 1950s."
  • "But the concept received a major reboot when Purdue University—West Lafayette created its Back a Boiler income-share agreement fund."
  • "Since Back a Boiler launched in 2016, nearly 500 Purdue students have enrolled in the fund for a total of $5.9 million. While the Purdue ISA fund is one of only a few ISA options available, more colleges and universities are exploring bringing this option to their own campuses. Here are five aspects about ISAs and the Purdue fund, in particular, that prospective borrowers should understand when considering this alternative to student loans."
  • "Students can ask the financial-aid office at the school they attend or are planning to attend if an ISA is available; only a few dozen schools currently offer one. Each has its own eligibility requirements and terms."
  • "The list of interested colleges and universities continues to grow, according to Tonio DeSorrento, chief executive of Vemo Education, which helps higher-education schools design customized ISA programs. The company works with about 45 institutions, including around 30 colleges and universities. ISAs are also becoming more widely available as a funding option at specialty schools such as coding academies."
  • "In short, an ISA is a contract between a student and school in which a student receives education funding in exchange for a percentage of his or her posteducation salary for a set number of years. These agreements have the potential to make higher education more affordable, but that doesn’t mean they are necessarily a good deal. As with student loans, there can be risks."
  • "The idea of the LISA program may seem confusing but can be explained quite simply. You apply for one of our 20 coveted spots for the program. "
  • "Beyond coding bootcamps, major universities such as Purdue and Clarkson have also introduced the model as an alternative to high-interest student loans. But the model still remains unknown to a large segment of the population, and as a result misconceptions about ISAs and what makes them unique abound."
  • "For the 2017-2018 academic year, sophomores were also allowed to participate. Of the 434 eligible students who applied and received an ISA disclosure in the second year, 278 (64%) participated. In total, the university dispersed $6.1 million or about $14,000 per participant. Some students applied in both years and so are present in the data twice. In total there are 668 unique students."