In the 1970s, Yale University offered a program that allowed graduating classes to collectively repay their tuition after finding employment. Everyone who could afford it would pitch in to foot the bill of the entire group.
But that first iteration of Income-Share Agreements (ISA) failed spectacularly, as middle-income earners ended up repaying more than classmates who didn’t find jobs. The university eventually ended the program, and in 1999, it wiped away all repayment obligations for the participants.
Recently, however, ISAs have started cropping back up. Now awarded and repaid on an individual basis (rather than by class, as with the Yale program), they’re slowly becoming an accepted form of financial aid.
Unlike student loans, ISAs carry no interest. Students who receive them repay the “borrowed” amount as a percentage of their future salary for a set number of years.
While this funding option is still pretty rare, the following eight campuses do offer an ISA — with a few options specially for computer science majors, military students and noncitizens.
These programs could give you a way to forgo or lessen your loan borrowing while you pursue a bachelor’s degree, though be sure to check out some of our suggestions below to decide if an ISA is right for you.
For general education:
1. Purdue University
Through its Back a Boiler – ISA Fund, Indiana’s Purdue University offers ISAs as a supplement — not a replacement — for student loans. Eligibility is limited to non-freshman students who have exhausted their federal loans for the academic year and are considering private loans or asking their parents to borrow a Parent PLUS Loan. To qualify, students must have no significant negative incidents, such as wage garnishment or bankruptcy, listed on their credit report.
Nearly 800 students have received $9.5 million in funding through the program, according to the school. It caps each student’s repayment at two and a half times what they initially received. You could use the school’s ISA comparison tool to estimate your dues.
2. Lackawanna College
Lackawanna College, a private institution in Pennsylvania, reserves its ISA for covering remaining tuition costs after borrowing federal student loans. The program is available to students who sport at least a 2.5 grade point average and are pursuing select majors.
Lackawanna alumni who take part in an ISA enjoy a federal loan-like, six-month grace period before they start paying an agreed-upon percentage of their income for the following five years or so. At the end of those years, the participant no longer owes anything, even if they haven’t repaid as much as they originally received.
Also, alumni wouldn’t be asked to make ISA payments until they begin earning at least $20,000 a year, though a high-earning graduate could end up paying twice the amount of funding they initially received.
3. Clarkson University
Clarkson University’s donor-funded ISA program is competitive, available to only 20 students per year.
The private upstate New York university disburses up to $10,000 per student per school year. Members of the 2018 class who receive a four-year ISA, for example, would get $40,000 and then repay 6.2% of their income for a decade.
As a Clarkson student, you might not have to worry so much about securing a job (and affording your ISA payments). About 97% of graduates find work in their fields after graduation, according to the school.
4. Messiah College
Messiah College, a private Christian school in central Pennsylvania, started its pilot ISA program in June 2018 for undergraduates (as well as for graduate students studying occupational or physical therapy.)
Messiah students in an ISA would be expected to repay 3-3.5% of their income once their earnings surpass $25,000 annually.
5. University of Utah
In the pilot phase of its ISA, the University of Utah’s Invest in U program is limited to undergraduates who are within one year of collecting their diploma and are pursuing one of 18 majors. After accounting for gift aid like grants from your state and scholarships, these students could receive between $3,000-$10,000 to fund the final year of their education.
Depending on each student’s major and the amount received, they could expect to repay 2.85% of their employer’s paycheck for between 3-10.5 years. However, they can defer their income payments while they earn less than $20,000 or attend graduate school. Check out the university’s ISA comparison tool to measure its usefulness for your situation.
For computer science studies:
6. Make School
For some entering the computer science field, ISAs can prove useful. Many coding bootcamps and schools aren’t eligible for federal student aid in the first place, so ISAs are a way to fill the void.
That’s the case at Make School, which claims to be the first start-up-style school to offer bachelor’s degrees in applied computer science. Here, you could finance your education with either a partial ISA (worth $35,000) or full ISA ($70,000):
- Partial: Repay 20% of your gross salary for 30 months.
- Full: Repay 20% of your gross salary for 60 months.
The school also offers a $1,500-per-month ISA for living costs that would be repaid from 5-7% of your income over 10 years.
For military students:
7. Norwich University
Norwich University in Vermont became the only military college of its kind to provide an ISA option to its sophomores, juniors and seniors, rolling out the program in fall of 2018. That’s a positive because the cost to attend the private school for the 2018-2019 school year was a whopping $57,514.
You’d have to be comfortable giving back some of your salary to attend Norwich. By 2019, 48% of the graduating class of 2017 was employed — 38% of whom worked in the military, according to the school.
For noncitizen students ineligible for federal student aid:
8. Colorado Mountain College
The small, private Colorado Mountain College (CMC) makes its ISAs available exclusively to Deferred Action for Childhood Arrivals (DACA) and other noncitizen students who aren’t eligible for federal grant, work-study and loan programs.
The privately-financed Fund Sueños, which was piloted for the 2018-2019 academic year, awards up to $3,000 per year for these students, more than enough to cover CMC’s yearly tuition ($2,400).
Six months after graduation, students would repay the amount they received by remitting 4% of their income for up to five years. Students wouldn’t be held responsible for repayment if they failed to earn a salary of $30,000 or more.
If you’re eligible, keep in mind that CMC extends just five types of bachelor’s degrees: nursing, business, education, management and sustainability.
Ensure an ISA is a long-term plan for your degree
Like Yale University before them, many colleges try out an ISA program only to abandon it later. Allan Hancock College in California, for example, piloted a program in 2012 before dropping out.
Therefore, the list of schools offering ISAs and bachelor’s degrees is bound to change, even if it grows.
If you like the idea of an ISA — either as a way of borrowing less in private student loans or avoiding debt altogether — check in with the schools above. Ask about their programs’ funding to ensure it will be available long enough for you to benefit.
Before you decide, however, note that not all jobs are the right jobs for ISAs — take a look at our suggestions for some fields that are a better fit for this kind of funding.
Also, keep in mind that ISAs aren’t limited to paying for university degrees. The University of San Diego’s extension program, for example, offers an ISA for students seeking a certificate to become a digital developer, software developer, digital marketer or business analyst.
If an ISA sounds intriguing, take a look at some of the pros and cons. Earmarking a little of your salary in order to avoid racking up a lot of student loans could be just the opportunity you need.
The information in this article, including tuition costs and ISA terms, was accurate as of May 3, 2019, unless noted otherwise.
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A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
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|3.99% – 11.98%2||Undergraduate, Graduate, and Parents|
|4.50% – 11.35%*,3||Undergraduate and Graduate|
|4.84% – 11.99%4||Undergraduate and Graduate|
|3.27% – 10.80%5||Undergraduate and Graduate|
|4.46% – 9.43%6||Undergraduate and Graduate|
|3.74% – 9.72%7||Undergraduate, Graduate, and Parents|
|3.99% – 11.64%8||Undergraduate, Graduate, and Parents|