An income share agreement, or ISA, is one payment option offered to students by some bootcamps and other types of education programs. With this type of agreement, students pay nothing or very little until after they complete a bootcamp program. Then, once a student has finished the program and becomes successfully employed using their new skills, they begin to repay the provider by giving them a percentage of that income for a set period of time, or until they have paid a set total amount.
Why Bootcamps Offer ISAs
The problem with traditional pay-as-you-go structures and with financing tuition upfront is that they are prohibitive to those who are less financially well-off. These kinds of policies can contribute to economic inefficiencies – firms have many high-paying tech jobs to fill, but the pool of highly skilled tech workers is limited. Many bootcamps have a goal of leveling the playing field for workers in tech. That is, making high-paying tech jobs available to anyone who has the drive to learn the required skills, regardless of prior experience and socioeconomic background. The high cost of learning new technical skills can be a barrier to students who don’t have extra money readily available to invest in their education. However, students who master new skills in coding, data science, cybersecurity, or other in-demand subjects, are eligible for many high-paying jobs, which allows them to repay, and benefit from, their initial self-investment.
ISAs are a win-win scenario for everyone involved. By offering an option to pay for tuition through an ISA, bootcamp providers can establish themselves as more inclusive of students, no matter their financial background, and benefit by increasing the range of students they are able to serve. Firms benefit by increasing the number of skilled workers that are available for hire. Students benefit by gaining marketable skills without having to make a large initial investment.
How do Income Share Agreements Work?
Each bootcamp provider establishes their own Income Share Agreement policy, so the details can vary from program to program. Generally, the percentage of income that students pay back to the bootcamp ranges from 8% to 25% of their monthly pay, and the timeframe to complete repayment ranges from 1 year to 4 years. Some schools include a repayment cap – once students have repaid a set total amount, the ISA is complete regardless of how much time has passed.
Many programs allow a grace period while a student looks for their post-bootcamp job. Most ISA policies don’t require repayments to begin until a student has been hired and is earning an income above a certain threshold – $40,000/year, for example – though the exact amount may vary across bootcamps.
Bootcamps offer a variety of ways for students to make ISA payments each month. The payments can be made manually each month or students can choose to have them automatically deducted from their paychecks.
In some states, ISAs are subject to government regulation, and policies may vary from state to state. ISAs have also created some controversy at the national level due to claims that they can violate fair lending practices. The state of New York has placed strict regulations on ISAs by making it illegal for bootcamps to collect a repayment amount greater than the cost of tuition. Since ISA repayment generally depends on a student’s post-bootcamp income level, students sometimes end up paying more or less than the tuition cost. For this reason, bootcamps based out of New York may be less likely to offer ISAs as a payment option.
ISA at General Assembly: The Catalyst
Let’s dive into one bootcamp’s ISA program as an example for how these payment structures work. General Assembly calls their ISA option The Catalyst Program. This program is available to GA students regardless of their current financial situation or credit score. However, there are a few eligibility requirements – students must be 18 years or older, they must be a U.S. citizen, and they must pass/complete pre-work activities and a skills assessment.
Once the Catalyst application is complete, GA then certifies the student, the student signs an ISA contract, and they can begin their bootcamp program of choice without paying anything upfront.
After finishing the full bootcamp program, students are in the job-market. They will begin making ISA payments once they have secured a job (in any field, full or part-time) that pays at least $40,000 a year. At this point, students begin paying 10% of their monthly income to General Assembly and will continue to make these payments for 48 months OR until their total payment amount adds up to 1.5 times the cost of tuition. This means that if a student secures an especially high-paying job, they may complete their ISA contract well before the set 48 month period.
The program described above is specific to General Assembly. Elements that may vary across bootcamps are:
- The percentage of student income that is paid back monthly
- How long students continue to make ISA payments
- Whether or not there is a cap on total repayment amount (and what the cap amount is)
- Eligibility requirements for students to participate in an ISA program
- The income level attained by students that sets their ISA payments into effect
Pros & Cons of Income Share Agreements
|No upfront cost for the student to attend a bootcamp
|Students may end up paying more than the tuition amount (over an extended period of time)
|Repayment is tied to student outcomes, aligning the student’s success with that of the bootcamp program
|Monthly repayment amounts aren’t known at the time of signing the agreement, since they depend on the students’ post-graduation income
|Repayment is tied to income levels – lower risk that repayment amounts will be unaffordable
|Allow bootcamps to increase accessibility of their programs to a wider range of students
Income Share Agreement vs Deferred Tuition Plan
An income share agreement is one type of deferred tuition plan. A deferred tuition plan is any payment arrangement that allows students to complete a bootcamp and then repay the cost, rather than paying tuition when they enroll. The key feature of an ISA deferred tuition plan is that it bases repayment amounts on a student’s post-completion income. Other deferred tuition plans are similar in that students pay no or little upfront costs and then make monthly repayments after completing the program, but may not necessarily be attached to a student’s employment and salary level. The number and amount of these repayments will vary bootcamp to bootcamp and may be flexible for individual students.
Should You Choose an ISA Plan?
At the end of the day, it’s up to you to weigh the pros and cons of paying for a bootcamp with an Income Share Agreement. Think about your expected career outcomes after completing a bootcamp. If you aren’t looking for employment at a company where you’ll get a monthly paycheck, an ISA may not be the best choice for you. However, if you and your bootcamp provider of choice can both agree that the ideal outcome is for you to land a stable, salaried job at the end of your bootcamp participation, an ISA can be an excellent way to achieve this goal without a large upfront financial investment.