ISA - revolutionizing the future of education

Do you want to know the newest trend in modern education that can change your life?

A new tool that even big institutions and governments like the British government are using.

Stick around to find out!

This new tool is called Income-Share Agreement (ISA) and is a way to allow you to have your dream education without paying anything until you successfully land a job.

More technically, it’s a form of education financing wherein repayments are based on a student’s future income. An ISA provider gives the student money to pay for a course and the student contractually agrees to pay the provider a percentage of their salary for a set period of time.

Simply put, you pay nothing during your education and only when you find a job. You 'll pay a percentage of your income every month (normally from 8% to 15%) until you pay back a fixed amount of the total cost or a fixed number of payments.

calculations

The concept goes way back, when Milton Friedman originally proposed the concept in 1955, in his essay "The Role of Government in Education", in which he argued that students might beneficially be funded through an "equity investment" such that investors could "buy" a share in an individual’s earning prospects: to advance the funds needed to finance the training on the condition that such individual agrees to pay a specified fraction of his future earnings.

Increasing prices of education

The cost of education is skyrocketing in many countries, being the US one of the most glaring examples.

Since 1980, in the US, college tuition and fees are up 1,200%, while the Consumer Price Index (CPI) for all items has risen by only 236%.

Rise in university prices[1]

Approximately 42.9 million Americans with federal student loan debt each owe an average $37,105 for their federal loans [2].

This leaves a lot of people behind on having career opportunities.

It’s not a loan

There is a lot of misinformation about ISAs online. With an ISA you will never pay more than a fixed cap that you know beforehand. Unlike student loans, ISAs do not accrue interest.

With student loans you can end up paying more than the original amount due to interest and other different payment mechanisms.

Payment options

A new report says that about half of student loan borrowers in the USA have a higher student loan balance after 5 years!

“This may sound unbelievable, but this is what happens to 49% of federal student loan borrowers, according to a new report from Moody’s. Moody’s says that only 51% of federal student loan borrowers who started student loan repayment in 2011-2012 had made any progress in reducing the balance on their student loans after five years. This includes borrowers from public, private and for-profit colleges” [3]

If you are paying interest or more than a fixed total cap, it is not a proper ISA.

And an ISA is typically paused if you are not working for some reason.

How is the ISA great

An ISA is great because:

You always pay a percentage of your salary, so even if you have an increase in your salary, the effort will be the same. For each increase in 100 dollars you’ll always pay the same - if for example you pay 12%, you’ll always pay 12 $ on every extra 100 of salary no matter what. If you have a salary increase, it only means you’ll pay your ISA faster, but the amount will be the same in total, allways.

There is no interest, you always pay a maximum value, if it has interest it is not an ISA.

The payments are paused if you don't have a job.

Some ISAs even add conditions of minimum salary threshold (you only pay if you’re earning above the minimum threshold).

The incentives are aligned and the school is rewarded only if you have real success, meaning you pay for results only.

ISAs are getting popular

With student loan debt at all-time highs, ISAs are slowly gaining popularity among students. In 2019, more than $250 million in ISAs were originated, with an additional $500 million expected in 2020 [4].

ISAs are being used not only in new innovative schools but also traditional players like colleges (University of Utah, Purdue University, etc) and governments like the British one.

You can see some of the players here: [5]

ISA players

There are a lot of new exciting opportunities in areas like software development, data, markeking, design and much more

Join the ISA movement and boost your career 🚀

Sources: [1] Visual Capitalist - “The Rising Cost of College in the U.S.” [2] Education Data Initiative - “Student Loan Debt Statistics” [3] Forbes - “Wait, My Student Loan Balance Went Up After 5 Years?” [4] Investopedia - “Income-Share Agreement (ISA)” [5] Career Karma - “Income Share Agreements (ISAs) – State of the Market 2019”