What are income share agreements and how do they affect student debt?

What are income share agreements and how do they affect student debt?

Income share agreements (ISAs) are financial contracts where students pay a percentage of their future income for a set period in exchange for funding their education. They can reduce student debt by aligning repayment with income.

Are ISAs better than traditional student loans?

ISAs can be more flexible than traditional loans since repayments are based on income. However, they may end up costing more if a graduate earns a high salary.

What are the risks associated with ISAs?

Risks include potentially high repayment amounts if income is high, lack of regulation, and the possibility of not covering all educational costs.

How do ISAs impact students from low-income backgrounds?

ISAs can be beneficial for low-income students as they may not require upfront payments and can provide a safety net during low-earning periods.

Can you give examples of schools that use ISAs?

Yes, several institutions like Purdue University and the University of Utah have implemented ISAs as part of their financial aid options.