Income Share Agreement Library

Income Share Agreements (ISAs) are an alternate form of student financing based on sharing a percentage of one’s future income in the future. Rather than borrowing money to pay for their education upfront, students will instead commit a portion of their future income and will pay for their education after they graduate. The payments they make will be tied to their income, and so if they earn a low salary, or get a promotion, their payments will reflect that change. Further, if a student earns under a certain amount after graduation, they will not have to pay until either they start to earn more money, or the term of their ISA expires.

Inspired by my recent essay on “Internet Librarians”, I have compiled a short research guide to ISAs that includes podcasts, articles, essays, reports, and other content which provides a good insight into the concept. This list will be updated frequently as more information becomes available, and new categories may be added in the future as they are published.

You can find some of my ISA research here. You can find Career Karma’s Dropbox folder with a library of ISA research papers here.

Income Share Agreement Fundamentals

A variety of colleges and vocational bootcamps across the U.S. are using ISAs to align the incentives of the student and the institution, and ensure that everyone who is passionate about learning can pursue a further education. The articles listed below cover the basics of ISAs and how they work in practice.

  • Life Capital: A Deep Dive into the Past, Present, & Future of Income Share Agreements” by Erik Torenberg (2019)

    • This article by Erik Torenberg provides a detailed introductory description of ISAs, historical ISA antecedents, and outlines how ISAs could be scaled in the future to increase access to and the quality of education.

  • The Opportunities and Challenges of Income Share Agreements” by The Aspen Institute (2017)

    • This article outlines the history of ISAs, the challenges which would need to be overcome for ISAs to grow, and how ISAs can be used to increase the quality of education through aligning the incentives of the student and the institution.

  • No Tuition, but You Pay a Percentage of Your Income (if You Find a Job)” by Andrew Ross Sorkin, NYT (2019)

    • This article explores how ISAs have been used by vocational bootcamps to increase the quality of education, how incentive alignment influences the bootcamp’s offerings, and addresses some common concerns surrounding ISAs.

  • "A Guide to Income Share Agreements(ISAs)” by Avenify (2019)

    • Get an insight into the history of ISAs, the economics associated with the agreements, the current regulatory environment, and the common concerns associated with ISAs which may impact their growth.

  • ISAs and the Future of Securitization” by Sam Lessin, The Information (2019)

    • Learn about how the internet has influenced the development of financial securities, the benefits of using ISAs to finance education, the overall benefits of ISAs, and how they will act as a financial security.

  • How Much Is Your Education Worth? Depends How Much You Make” by Tyler Cowen, Bloomberg (2019)

    • Explore the benefits and costs associated with treating humans as equity investments, how vocational bootcamps such as Lambda School are using ISAs, and learn about alternate human investments which are being explored based on the concept of an ISA.

  • What’s Scarier Than Student Loans? Welcome to the World of Subprime Children” by Malcolm Harris, NYT (2019)

    • Gain an insight into the other side of the ISA argument from this NYT op-ed, and learn more about the concerns people have surrounding how ISAs could lead to humans being seen as investments more than individuals, and how ISAs could lead to a change in our childhood.

  • Income-share agreements are a novel way to pay tuition fees” by The Economist (2018)

    • This article explores the potential benefits associated with ISAs as a method of financing education, and uses the Purdue University program as an example of how ISAs are used in college. This article also explores the nascent state of the market, and a brief description of government involvement in ISAs.

  • College Grads Sell Stakes in Themselves to Wall Street” by Claire Boston, Bloomberg Businessweek (2019)

    • This article covers the viability of ISAs in higher education, how Purdue University has developed their ISA program, and also covers the interest and potential within ISAs. This article further provides a series of short case studies regarding how ISAs have assisted students enrolled in Purdue University’s “Back a Boiler ISA Fund”, and also briefly covers ISAs as an investment opportunity.

  • Life Capital Conference Presentations - 3/27/2019” by The Life Capital Conference (2019)

    • The Life Capital Conference was hosted in SF in March 2019 and explored the past, present, and future of ISAs. The Conference invited a series of individuals involved in the ISA market and covered, in-depth, the opportunities and risks associated with ISAs, among other things. This page includes a link to the list of interview recordings from the event.

  • ISAs: The Friedman Solution to the Student Loan Crisis” by The Foundation for Economic Education (2019)

    • This article explores, in-depth, the value proposition of ISAs, the main drawbacks to the agreements, how they are being used today by schools, and more.

ISAs in Higher Education

Colleges such as Purdue University and the University of Utah have started to offer ISAs to students at their colleges. ISAs have the potential to help reduce the cost of college, and allow institutions to prove their value to prospective students. The articles listed below provide an insight into how colleges are using ISAs.

  • A New Way to Pay for College” by Planet Money, NPR (2019)

    • Learn about how Purdue University is using ISAs to increase access to their education, from the perspective of a student who has borrowed money through an ISA.

  • Traditional Financing Doesn’t Work for the Average College Student” by Leif (2018)

    • This article provides a brief overview of the issue of college financing, and why an alternative financing model such as an ISA is needed to help ensure that people can start and finish their college education.

  • Student and Parent Perspectives on Higher Education Financing” by Jason D. Delisle, American Enterprise Institute (2017)

    • This report explores how parents and students feel about ISAs as a method of education financing, based on a study that interviewed people from these groups.

  • The Yale Tuition Postponement Option” by Alex Usher, Higher Education Strategy Associates (2016)

    • This article explores the Yale TPO, the first institutional implementation of income-driven repayment for students. Although this program was a failure, it set a historical precedent regarding how not to structure ISAs, and provides an insight into the importance of structuring ISAs correctly.

Academic Reports

There have been a number of papers authored that aim to analyze ISAs in-depth, and explore their long-term viability. Researchers and institutions have thus far written about topics such as ISA policy, how they can assist in increasing access to education, what the future of ISAs may hold, among others. The articles listed below cover some of the most notable academic research in the space.

  • The Role of Government in Education” by Milton Friedman (1955)

    • The concept of investing in a person’s education in exchange for a percentage of their future earnings was initially developed by Milton Friedman in the 1950s. Although this paper does not exclusively cover ISAs — indeed, ISAs did not exist at the time this paper was published — it does act as a good historical reminder of the concept of ISAs.

  • The Income Share Agreement Landscape: 2017 and Beyond” by American Institutes for Research (2017)

    • This report commissioned by the AIR explores the potential of ISAs and includes a brief overview of the state of the current ISA market. The report also includes a detailed SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of ISAs and how they can be leveraged to increase the quality of and access to education.

  • Human Equity? Regulating the New Income Share Agreements” by Diane M. Ring and Shu-Yi Oei, Boston College Law School (2015)

    • This research paper covers the history of ISAs and similar economic models, how the transactions should be characterized, and discusses the benefits of adopting a multi-factor framework to regulate ISAs. This report also covers the current regulatory environment in-depth, and the nuances associated with specific classifications of ISAs under the law.

  • The Future of Student Aid” by entangled.solutions (2017)

    • This report discusses the main financing options available to college students today, and outlines how ISAs could be used to increase the quality of education, increase access to education, and also addresses how the ISA space may develop in the future.

  • The Potential Market for Income Share Agreements Among Low-Income Undergraduates” by American Institutes for Research (2015)

    • This paper explores how ISAs could be offered to undergraduate students, and their effectiveness in increasing access to education for low-income students. The paper also outlines the potential for more inclusive ISA markets, and provides a key insight into the economics behind offering ISAs in higher education.

  • Student Selection into an Income Share Agreement” by Kevin J. Mumford, Purdue University (2018)

    • One of the most common concerns associated with ISAs is adverse selection — how an institution may treat students differently based on certain factors. This report addresses the myth of adverse selection, and how no adverse selection has been observed in Purdue University’s ISA fund.

  • Untapped Potential: Building opportunity and access in education and careers through pay-for-success tuition plans” by General Assembly

    • This report discusses how ISAs work, how General Assembly has been experimenting with ISAs, and how they are balancing the risks and opportunities associated with offering ISAs as a method of paying for access to the bootcamp.

  • Picotte: A Model for Post-Secondary Education Income Share Agreements Based on Blockchain Smart Contracts” by Lih-Hann Chiu (2017)

    • This paper explores how blockchain-powered Smart Contracts could be leveraged to reduce administration costs associated with ISAs, make it easier to issue and manage ISAs at scale, and advocates for how this model could be constructed in the future.

  • Promoting Genuine Competition in Private Financing for Higher Education” by Alexander Holt, The Urban Institute (2017)

    • This research report includes a description of the issue associated with competition in higher education financing, and makes a series of recommendations as to how competition could be promoted. The report mentions the benefits of eliminating Parent PLUS loans, and leveraging alternate models such as ISAs to offer more favorable financing terms to students.

  • The Next Phase For Income Share Agreements with Chuck Trafton and Will Nelligan” by Venture Stories

    • This podcast interview features Chuck Trafton of Edly, an ISA marketplace company, and Will Nelligan from the Education Finance Institute discussing the promise of ISAs in education and workforce development. Learn about the problems with student debt, why a capital market for ISAs makes sense, and how ISAs can help fix some of the perverse incentives in higher education.

ISA Policy

ISAs have started to gain more attention from policymakers, both in terms of how they should be regulated, and how the federal government could assist in the development of ISAs in higher education. Regulation will play an important part in the future of ISAs, and will impact both the offerings of current service providers, and future service providers. The resources listed below outline the current regulatory environment, and what we can expect in the future of ISAs.

  • Battle Lines Drawn on a Student Loan Alternative” by Andrew Kreighbaum, Inside Higher Ed (2019)

    • Explore the evolving regulatory landscape surrounding ISAs and learn about the concerns Democrats have started to consider which have warranted a further investigation by some Congresspeople regarding the viability of ISAs.

  • Income Share Agreement Policy in Higher Education” by James Gallagher (2019)

    • Learn about how regulators and policymakers are currently treating ISAs, the opportunities in ISAs, and how legislators could get involved with ISAs in the future to help increase access to education, mitigate the student debt crisis, and assist service providers.

  • Making Sense of Income Share Agreements” by Alison Griffin, Forbes (2019)

    • ISAs are becoming an increasingly popular method of financing education, which has lead to more regulatory interest in the concept. This article explores how regulators and policymakers should regulate ISAs in the future, based on the lessons taught by existing ISA service providers.

  • The Future of Income-Share Agreements: Policy and Politics” by Sheila Bair and Preston Cooper, Manhattan Institute (2019)

    • Gain a firmer insight into the failure of the federal government in administering student loans, how ISAs are leveraged by colleges and vocational bootcamps, and who should assume the role of administering ISAs in the future.

  • As Income Share Agreement Politics Heat Up, San Diego Debuts First Renewable Learning Fund” by Michael Horn, Forbes (2019)

    • In May 2019, the San Diego Workforce Partnership and the University of California San Diego Extension announced the launch of the “Workforce ISA Fund”, which aims to offer ISAs as a method of paying for college at the institution. This article includes an interview between Michael Horn and Andy Hall, the Chief Operating Officer of the Fund, exploring the inspiration behind the fund, why they are using ISAs, and what challenges they expect to notice in the future.

  • Bill to Regulate Income-Share Agreements Moves Through the California Legislature, Again” by Sydney Johnson, EdSurge (2019)

    • The California Legislature is currently considering Assembly Bill 154, which aims to create a state ISA pilot program which would allow students to use an ISA to fund their education. This article provides a brief history of the bill, how proponents and critics are reacting to the legislation, and the proposed structure of the ISA fund if the bill were to pass.

Vemo Education has also published a research guide for ISAs, if you are interested in more academic resources. If you have any suggestions for resources that could be added to this article, reach out to me on Twitter.