Income Share Agreement, ever heard of it? As a college student, chances are you've come across several different ways or options to finance your education. At this point, we're talking about everything from traditional student loans to private student loans to credit union loans and more. But of course, in this post, we're looking at the financial tool, Income Share Agreement. Generally considered an alternative to traditional student loans, ISAs work on the premise of repayments based on your income following your graduation. Perhaps the biggest highlight of learning with Income Share Agreement is that students won't have to worry about fees and interest. What's more, if things don't go as planned and you end up getting a job that doesn't pay much, you won't be coerced into making full repayment.
Interested in learning more about Income Share Agreements? Well, in this article, we're going to explore exactly what it is, compare it to traditional loans, let you in on the benefits and finally, suggest some of the few providers around.
Sounds good? Let's get to it.
What is an Income Share Agreement?
In simple terms, an income share agreement is a financing tool through which a borrower receives money from a lender in exchange for a percentage of his future income over a specific period of time. Essentially, you as a college student agree or promise to pay for your college education by making predetermined payments after landing a good job following your graduation. It's worth noting that, borrowers, for the most part, typically pay between 5% to 10% of their income over 5 or 10 years.
For example, if you take out $10,000 worth of ISA funding and hopefully (after graduation ) land a job where you earn up to $30,000 per annum, you'll have to deduct 5% (or up to 10%) each year until full repayment is made.
At this point, it's important to note that most colleges have a role to play to ensure that everything goes according to plan in regard to income share agreements. Generally speaking, ISAs encourage colleges and universities to show that they have what it takes to deliver excellent outcomes based on their educational objectives. Of course, this is precisely how students can be able to ace their courses, graduate and get a job that can assist them in processing ISA payback
Difference Between ISAs and Loans
Perhaps the biggest difference between ISAs and loans is that you won't be forced to repay the actual amount you borrowed. This is primarily because everything it is based on future outcomes. In other words, your repayment is based on how much you earn after getting a job. That said, if after graduation, you get a lower-paying job, you could end paying less than the initial agreement.
Now, let's look at the benefits of ISAs
- Most ISAs feature a minimum income requirement. In essence, you may not be required to make payments if your earnings are within minimum wage.
- Payments are only expected from your Income. That said, the ISA is only effective when you have a real job.
Top ISA Providers in the USA
Ready to take the next step to get ISA funding for your college education? If yes, you will be happy to know that you have a few options available. These are some of the most trusted lenders you may want to consider:
- Stride
Geared towards majors that fall into STEM (science, technology, engineering, mathematics), business and healthcare fields, Stride is a leading provider of ISA in the US. With this option, graduate students can get up to $30,000 in ISA funding and agree to pay back with a percentage of their income over 5 to 10 years.
It's worth mentioning that Stride makes the process of getting and paying back ISA funds to be as seamless and reasonable as can be. For example, you won't be required to make payments if your future earnings fall below $40,000 per annum. What's more, with Stride, you won't have to worry about paying more than the fixed percentage regardless of how much you earn per year. And finally, they offer personal support just in case you have any doubts or questions along the way. All in all, a great option for grad students in specified fields.
- Vemo
Next in line is Vemo, an ISA provider that believes in achieving school goals, meeting the needs of students and expanding educational access for all Americans. Essentially, Vemo creates sustainable partnerships with colleges, universities and other educational institutions to design and implement ISA programs for better access to quality education. As a student, if you choose to get funding from Vemo, you won't have to worry about any form of principal or looming balance whatsoever. What's more, you only pay back the exact amount according to the agreed percentage (while you have a job). Put another way, there'll be absolutely no interest compounding when out of employment. Finally, as with other ISA providers, Vemo works with a fixed time to make payments — no surprises or complications. Don't hesitate to visit their site to learn more.
- Align
First off, Align is an ISA provider in the USA, but an important fact is that it isn't for everyone. It's geared towards borrowers in Utah, Illinois, Montana, New Mexico, and Delaware. Align offers ISAs as a financing alternative to personal loans. That said, this provider isn't geared towards college students alone. It also focuses on people looking to get cash for one or two life needs or issues. It's also important to note that Align comes with certain requirements to qualify for its funding. Speaking of which, Align requires borrowers to have a credit score of 600, earn at least $22,000 a year and work at least 35 hours a week.
Do you consider ISAs to be a better alternative to traditional student loans? Is it the right choice for you? With no interest, no fees and of course, no coercion to pay back regardless of your earnings, we think ISAs are an excellent choice moving forward.