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Revolutionizing Student Financing

Posted on May 20, 2022 by Anna Klawitter

Meratas was founded on the belief that all students should have access to quality education regardless of income level or family circumstances. 

Meratas helps institutions increase access by giving them the tools to offer their students flexible tuition options with adaptable, Learn Now, Pay Later tuition plans that remove the financial barriers from upskilling.

Our cloud-based, turn-key platform is an all-in-one software platform to administer flexible, outcome-based payment plans to help institutions manage multiple, fully customizable tuition solutions in one place.

Meratas’ flexible financing platform makes it easier for institutions to offer alternative options to students while helping them achieve academic success and advance in their careers. 

Darius, the founder, and CEO of Meratas, was an early pioneer in Alternative Financing. Providing legal guidance surrounding investments in particular situations and asset classes like ISAs, he saw the need for better tools to efficiently manage flexible financing programs at scale.

We know that tuition payments and student enrollment are at the heart of any educational institution, so we created the solution: Meratas helps learning institutions launch thoughtful ISA programs designed to promote student access and increase enrollment.


All in one  cloud-based tuition platform

With Meratas, we deliver a comprehensive suite of software tools so you can control your processes. Our solution is turn-key, enabling you to launch your full-service, scalable solution in two weeks.

A Thoughtful Structure

Our Learn Now, Pay Later tuition solutions are designed with either capped interest or income-correlated repayments, such as with ISAs, to help students’ repayments stay manageable and avoid the cycle of mounting debt.

The Merit Score

Using our sophisticated underwriting tools,  institutions gain full data transparency into their applicant profiles, allowing you to admit more students over time while also decreasing your credit risk. Our Merit Score is based on the aggregate platform usage from all our partners. It is designed to turn recurring transactions into valuable and actionable insights, enhance underwriting, and assess creditworthiness.

Student Support

Institutions gain access to their student application process for their students to apply directly through Meratas. Students also gain access to their student portal to view the details of their tuition plan and the student support team who are there for them every step of the way. From guiding them through the application process to set them up for success before their first payment, all with less than a 24-hour response time, students are supported in every step of the process.


If you’re a school or skills training program looking to increase enrollment, open access to your program, and improve retention, Meratas gives you the tools you need to do all these things and more. With our visibility into data and customizable platform, you can get a clear picture of your progress and access unparalleled scalability with ease. 

If you’re ready to take the next step or learn more about the Meratas platform, head over to our Partner’s page and download our platform overview brochure.

Posted under: Buy Now Pay Later, Income Share Agreements

ISA Student Benefit: Income Share Percentage Discount

Posted on May 24, 2021 by Anna Klawitter

College is not only far more expensive than it was a decade ago, but the burden of paying for it has also shifted away from the public to individual students. At the same time, the odds of graduating and immediately landing a job that rewards you have become even more difficult. 

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Posted under: Tuition Options, Income Share Agreements

Income Share Agreement Student Benefit: Cap Paydown

Posted on May 17, 2021 by Anna Klawitter

College still provides a strong return on investment for many students. But the risk profile of that investment has gone up dramatically with the cost of college in recent years. One way that schools are sharing the risk and reward of education with their students is through the use of Income Share Agreements (ISAs). 

With this type of agreement, students pay nothing, in most cases, until after they complete their program. Then, once a student has finished the program and becomes successfully employed using their new skills, they pay a percentage of their income for a set period of time until they have either reached the Required Payments, Max Payment Cap, or Payment Window. 

Income Share Agreements have a whole host of student benefits that are often absent from traditional private student loans. For example, there is something called the Minimum Income Floor, which is the minimum amount a student needs to earn before they begin paying back their ISA. There is also a payment window, which is the set time frame that the ISA funder has to collect all of the required payments under an ISA.

In today’s post, we’re going to take a look at the ISA student benefit known as the payment cap.

The Payment Cap

One way to satisfy your ISA is by paying the Max Payment Cap. (The most common way to pay back your ISA is by making all the required payments. Read about the different ways to pay off your ISA here). The Maximum Payment Cap limits the maximum amount of income a high-earning student is required to share. This is in place to ensure that high earners do not overpay on their ISA.

The Max Payment Cap is built into your contract and is the most you’ll ever need to pay towards your ISA. A Payment Cap is usually some amount more than the funded amount (the amount the school is fronting you for their program as part of your ISA). Once you hit your Max Payment Cap, your ISA is completed.

For example, let’s say your agreement terms dictate that you pay 10% of your monthly income over 24 required payments (read more about required payments here.) Let’s say your Max Payment Cap is $12,000. Based on your income, you would pay $500 per month to your ISA. If your income doesn’t change for 24 months and you make each of those $500 payments each of those months, your ISA would be finished. But let’s say, you’re crushing it at your job, and 10% of your income would now be $1,000 a month. If you had to make the same 24 repayments, you would pay double the amount over the course of your ISA.

However, that’s where the max payment cap comes in. Instead of doubling all of your payments for the same 24 months, you instead would just continue making your monthly payments until the total sum of all your payments reaches the Max Payment Cap. If you pay your $1,000 payments each month, you’ll hit your payment cap in only 12 months thanks to the payment cap. You’ll pay it back a full year earlier than if you were making the 24 required payments!

 

The Cap Paydown

The Cap Paydown is a feature for higher-earning students to pay off their ISA as quickly as possible. The cap paydown is a feature of our ISA design that Meratas makes available to all our partners as an option to offer to their students.

This gives students who have an income while they are in their program the chance to potentially lower the overall cost of their ISA significantly over the course of the contract.

Essentially, the Cap Paydown allows students to make smaller, fixed payments (usually a few hundred dollars) each month while they are still in their education program. These payments continue until they find a qualifying job and are making above the Minimum Income Threshold outlined in their ISA, at which point they then switch over to making their ISA payments. In exchange for making these payments while in their program, students receive a discount on their Max Payment Cap of either the total amount of the initial payments made or a flat amount.

For example, let’s say your Max Payment Cap would be $15,000 in your ISA. But if your program offered a Cap Paydown and you started making $300 monthly payments during the program, your payment could be lowered by $3,000 to $12,00 depending on the terms of your program’s Cap Paydown.

This feature is especially important for students who are confident they’ll be able to get a well paying job after graduation and know they’ll reach the Payment Cap before their Required Payments or Payment Window are up.

Meratas is the only ISA platform that offers this student benefit as an option to partners on our platform and is one of the many benefits of working with Meratas for all of your ISA needs. Ready to offer an Income Share Agreement program at your school or educational institution designed to increase student enrollment and accessibility? Partner with the leading Income Share Agreement software company that provides a full-service, turnkey, SaaS platform to design, originate, and manage ISAs.

Schedule a meeting with one of our ISA specialists today! 

Although every effort has been made to provide complete and accurate information, Meratas Inc. makes no warranties, express or implied, or representations as to the accuracy of content contained herein. Meratas Inc. assumes no liability or responsibility for any error or omissions in the information contained herein or the operation or use of these materials.

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Posted under: Tuition Options, Income Share Agreements

A Guide to ISAs vs Traditional Private Loans

Posted on October 16, 2021 by Anna Klawitter

With student debt in America amounting to $1.6 trillion and 5.2 million student loan defaults last year, many are beginning to wonder if there’s a better way to pay for education.

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Posted under: Tuition Options, Income Share Agreements

Unlocking the Potential of ISAs to Tackle the Student Debt Crisis

Posted on November 8, 2019 by Anna Klawitter

This post was originally written by Richard Price of the Christensen Institute. The original post along with his full paper can be found here.

With one million defaults on traditional private student loans every year, and $1.6 trillion in outstanding student debt, it’s clear the U.S. is in desperate need of innovative funding models in higher education. Income Share Agreements, or ISAs, stand to provide a promising alternative to high-risk traditional private student loans, as they better align the interests of students, schools, and lenders.

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Posted under: Tuition Options, Income Share Agreements

Income Share Agreements:  A Glossary of Key Terms

Posted on June 24, 2020 by Anna Klawitter

We know that Income Share Agreements can be confusing. They’re an uncommon way of financing that includes many terms people may not be familiar with.

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Posted under: School Resources, Income Share Agreements

Income-Share Agreements vs. Traditional Private Student Loans: Which is Right for Your Career Path?

Posted on August 17, 2020 by dmk

What if, instead of borrowing money for school at a certain interest rate, you promised a percentage of your future earnings to cover the cost?

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Posted under: Tuition Options, Income Share Agreements

15 Schools That Offer an Income Share Agreement To Fund Your Education

Posted on August 31, 2020 by Anna Klawitter

An Income Share Agreement (ISA) is funding for higher education in exchange for a percentage of your income if and once you land a decent job.

ISAs are becoming increasingly common. For some, they’re a no-brainer. An ISA, for example, could help fill in the gaps for financial aid if you’ve reached federal borrowing limits or are attending a school that’s ineligible for federal or traditional private student loans. They are also ideal for students looking to upskill using a Bootcamp or specialty school where they might not have a traditional means of funding.

In some cases, ISAs are available directly from your school, who partner with companies, such as Meratas, to administer and organize the ISA. But in other cases, it may be more difficult for you to find an Income Share Agreement if your school does not directly offer one. If you’re interested in comparing your options, here are different ways to secure funding for your degree through an ISA.

Schools That Offer Income Share Agreements

All sorts of schools are joining the ISA game, including traditional 4-year colleges and universities, online-only educational institutions, and a variety of bootcamps and career training programs. Although this isn’t an exhaustive list, this will highlight some key ISA programs offered across the U.S.

Purdue University

Through its Back a Boiler – ISA Fund, Indiana’s Purdue University offers ISAs as a supplement – not a replacement – for traditional private student loans. Eligibility is limited to non-freshman students who have exhausted their federal loans for the academic year and are considering traditional private student 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.

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’s 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.

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 10 years.

About 97% of Clarkson graduates find work in their fields after graduation, according to the school.

Messiah College

Messiah College, a private Christian school in central Pennsylvania, started its pilot ISA program in June 2018 for undergraduates. Messiah offers $5,000 per year and the payment cap is 1.6x the ISA amount that students take out. Messiah students in an ISA would be expected to repay 3-3.5% of their income for 84 months once their earnings surpass $25,000 annually.

The 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 $6,000-$20,000 per academic year.

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.

Colorado Mountain College

Officials at Colorado Mountain College had a specific goal in mind when the school launched its ISA program in 2018: help undocumented students pay for college.  CMC’s tuition per year is $2,400, so their ISA program offers $3,000 per year.

Depending on each student’s situation, they could expect to repay 4% for 60 months once they are earning $30,000 (or sooner if a student pays back the total amount of the funds they received before 60 months), and the great thing about this ISA is that students don’t pay more than the amount of ISA that they take out.

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 the fall of 2018.

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.

Northeastern University

Northeastern University is a private research university located in Boston Massachusetts. They offer both undergraduate and graduate-level programs. Northeastern’s students distinguish themselves as some of the nation’s top creative thinkers, intrepid entrepreneurs, and motivated researchers.

Northeastern understands that each student’s and family’s financial circumstances are unique and offer a number of payment and financing options including Income Share Agreements. The funds through their ISA program are typically provided per term in alignment with the billing cycle, academic year, and terms of enrollment. Exact disbursement dates are determined by your ISA provider.  Check out Northeastern’s ISA terms here.

Lambda School

Lambda School has built a curriculum designed to get you hired. They asked hundreds of top tech companies what specific skills they look for in candidates and then designed their lives and remote programs to include learning activities that help you master each key skill.

With Lambda’s ISA, they cover all of your $30,000 tuition in exchange for 17% of your income for 24 months, but you only start making monthly payments once you’re earning $50,000.

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 of funding.

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): With a partial ISA, you repay 20% of your gross salary for 30 months. With a full ISA, you 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 to 7% of your income over 10 years.

Awesome Inc

Awesome Inc is a 16-week bootcamp that offers an online intensive training program for aspiring software developers based in Lexington, Kentucky. With over 500 hours of hands-on training, students will gain experience while building ten+ projects using HTML, CSS, JavaScript, web frameworks, GitHub, Agile, and more. The program is aimed at beginners, and students learn HTML, CSS, JavaScript, web frameworks, GitHub, Agile, and more. The coding Bootcamp is designed to feel less like school, and more like the first 3 months on the job. With their Income Share Agreement program, you can go to Awesome without any upfront payments! Check it out here. 

Redwood Code Academy

Redwood Code Academy offers software development bootcamps for either 12 or 24 months in either New York, San Francisco, or online. Redwood Code Academy covers full-stack software development, with a focus on web applications, but also includes mobile applications, desktop applications, and cloud services. The Academy focuses on real-world skills training by helping students learn the fundamentals of full-stack development.

Redwood Code Academy also provides students with career guidance including resume prep, optimization of LinkedIn and Github profiles, mock job interviews, and introductions to local recruiters and employers in Redwood’s hiring network. Redwood is powered through Meratas to offer an ISA to their students. Check it out here

Wyncode

This bootcamp offers full-time and part-time Full stack development, front end web development, digital marketing, and UX/UI design programs in Miami, Florida. The program is 10 weeks full time and 12 weeks part time. 

Wyncode’s Income Share Agreement program allows three candidates in every cohort to enroll in a full-time Wyncode program with no up-front tuition costs. Wyncode’s Income Share Agreements are granted to candidates that have a financial need. ISA recipients can pay back tuition once you’ve landed a job making $40,000/year or more. ISA applications are open for our full-time programs: Full Stack Web Development and UX/UI Immersive. 

Insight Data Fellows

Insight is a seven-week professional training fellowship and data science program designed to be your bridge to a thriving career. Applicants should have a background in Physics & Astrophysics, Mathematics & Statistics, Neuroscience & Bioinformatics, or Engineering & Computer Science, as well as their PhD. Students are mentored by employees of top tech companies, who then hire graduates as data scientists and engineers. Insight’s ISA is designed to lower the barrier of entry to making career transitions, allowing Fellows to join the program without requiring any upfront payments. You can find an example agreement here.

 Holberton School

 Holberton School is a two-year software engineering school that trains individuals to become Full Stack Software Engineers with courses in full stack web development, machine learning, augmented and virtual reality, and algorithms.  The school’s mission is to train the next generation of software developers through 100% hands-on learning. The bootcamp is broken into three different components. Students complete the 9-month Foundations school then a 6-month internship followed by a 9-month Specializations course. Their curriculum focuses on collaborative, project-based learning with no formal classrooms or teachers. Holberton’s students have been hired by the world’s leading tech companies. They also offer their students Income Share Agreements to fund their education.

Companies That Offer Income Share Agreements  

A company that offers ISAs means that any student can apply with them and use those funds for any school, regardless of whether that school offers an ISA. You would apply with the company for a certain ISA, they would then disburse those funds to you, and then you could use those funds for your school or program. For now, only a few private companies provide ISAs directly to students – Blair, Lumni, and Align are among them – although more are expected to join. Edly and Tradeup also provide direct to consumer ISAs.

As you review these ISA providers, compare terms such as income threshold and repayment cap, just as you’d judge traditional private student loans by their interest rate and repayment term. By looking at the income share terms, you can help ensure you land an ISA with the company that best fits your needs.

What if My School Doesn’t Offer an ISA?

That’s where Meratas comes in.

Meratas

Meratas provides a full-service SaaS Platform for Schools and Skills-Training Courses to design, administer, and service custom ISA programs. We help institutions create impactful ISA programs designed to promote student accessibility and increase enrollment.

Our programs are intended to incentivize students, schools, and capital providers to work together to promote and finance only the best educational programs that lead to more successful careers.

If you’re interested in offering an ISA option at your school or program that has been proven to increase student enrollment, there’s no better time to offer one then now! Click here to schedule a call with one of our ISA specialists and get your ISA program up and running today.

Are you a student and don’t have an ISA option at your school? Want one? Let us know here so one of our ISA specialists can reach out to your school!

Ensure an ISA is a long-term plan for your degree

If you like the idea of an ISA – as a way of borrowing less  traditional private student loans  – check in with the schools above. Although this list is not extensive, if none of these schools line up with your plans, check out our student’s page for a list of even more schools. (Please note these ISA statistics are as of August 2020 and are subject to change in the future.)

Before you decide, however, note that not all jobs or training paths are the correct ones for an ISA – take a look at our suggestions for some fields that are a better fit for this type of funding.

If an ISA sounds intriguing, take a look at some of the pros and cons. Interested in more ISA programs? Check out our student’s page for a full list of schools and programs offering an ISA through Meratas!

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Posted under: Tuition Options, Income Share Agreements

What Makes a Great Income Share Agreement Product?

Posted on October 2, 2020 by Anna Klawitter

Student debt in the US has grown significantly since the passage of the 1965 Higher Education Act, which mandated the Federal government to guarantee student loans made by banks. As a response to the 1.75 trillion in student loan debt as of 2022, many are starting to rethink tuition funding.

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Posted under: School Resources, Income Share Agreements

The Ultimate Guide to Income Share Agreements

Posted on October 9, 2020 by Anna Klawitter

Income Share Agreements (ISA) have emerged as an alternative to traditional private student loans. Under an ISA contract, you are also provided with a deferred tuition option to cover costs in exchange for a promise to pay a percentage of your income after you’ve graduated. 

Besides the absence of growing interest and generally, no upfront payments, a significant benefit of an Income Share Agreement is the fact that there are certain instances when your payments are paused or deferred. 

This Guide will walk you through all the details of Income Share Agreements, including an explanation of what they are, how they work, and how to get started offering your own Income Share Agreement at your program or determine if an ISA is right for you as a student. 

After reading this post, if you have any other questions about Income Share Agreements, check out our ISA page. If you’re interested in offering an Income Share Agreement at your program click here to schedule a meeting with one of our ISA specialists. 

An Income Share Agreement can be summed up as

An ISA, or Income Share Agreement, is an agreement between a student and a school where in exchange for covering the cost of that student’s tuition, the student agrees to pay back a portion of their income after graduation for a set amount of time as long as they are earning an agreed-upon yearly income.

In an ISA contract, let’s say, for example, you were to go to a four year college as an economics major you might promise 10% of your monthly income for 24 months (24 monthly payments) in exchange for $10,000 (the cost of your tuition). The cap on your total payment would be 2 times the amount received and the minimum income threshold (how much you have to be making before you begin paying back) is $20,000

Let’s compare three scenarios: one with the average starting, pre-tax salary of an economics graduate, $50,000, one with higher pay, perhaps at an analytics or investment firm, $80,000, and one with lower pay, say at a Starbucks, $17,000.

In the first scenario, you’ll end up paying $416 monthly or $10,000 over the 24 months. In the second you pay 16,000. In the third scenario, you’ll pay nothing until your earnings climb above $20,000, but as long as you work full-time, your payment clock keeps ticking. If your earnings stay below $20,000 for the 24 months your obligation will end with no payments.

Of course, the above examples are if your earned pre-tax income stayed stagnant for the entire 24 months. If your income was cut in half or doubled your payments would be cut in half or doubled. But because the capped amount is 2 times the 10,000, the second you paid back 20,000, your payments would stop.

Although there are other protections included with student loans, generally you can’t get this specific kind of protection with a traditional private student loan. With traditional private student loan payments, whether you’re the Barista at Starbucks or the analytics specialist, you pay the same flat amount plus interest.

Income Share Agreement Key Terms

Since Income Share Agreements are a less common way of financing education there are some terms that differ from traditional private student loans that many are not familiar with. There are a variety of different factors that make up the structure of an ISA program, but here are some of the key terms to know. Here’s the full glossary of terms if needed.

Income Share PercentageThis is the fixed percentage of your future monthly pre-tax income that you agree to share during your contract term. Income shares can range from 2.5% to as high as 17.5%

Monthly Payment – This is what you pay back on a monthly basis after you’ve graduated during the term of your ISA contract. To put some numbers to this, if your Income Share is 5%, and you’re earning $60,000 per year (or $5,000/month), your Monthly Payment would be $250/month.

The Minimum Income Threshold The Minimum Income Threshold (or the Income Floor) is a minimum income below which students don’t have to make payments. These typically range from $20,000 to $50,000 but sometimes more depending on the industry and program. In addition to protecting students who are earning less, this once again incentivizes a school to align risk with their students. It’s their way of not only promoting the future income you could earn when going through their program, in some cases, it guarantees it.

Payment Cap or “Ceiling”Your payments are capped at an agreed-upon amount, so you are not punished for making a higher net income. This provides some protection to students who are extraordinarily successful from making unreasonably large payments. Generally, these caps range from 1.5x – 2x the tuition amount.

Payment Window This is how long your ISA contract lasts. The window typically ranges from two years to 10 years. Some ISAs will count months in which you earn less than the salary floor toward your repayment term. Others extend your repayment term in these instances.

Required Payments By far the most common way for one to satisfy their ISA. With an ISA, you pay back a fixed percentage of your earnings each month for a set number of months. Each of these payments is considered one of your Required Payments.

Automatic DefermentDuring periods of involuntary unemployment from sickness or other unforeseen circumstances, or if your total future income drops under a certain amount (the Minimum Income Threshold), your payment obligation will be automatically waived without penalty. Unlike traditional private student loans, where you must apply for a temporary deferment period, with an ISA agreement, your payments will be suspended automatically during periods of economic hardship. Think of it like having an insurance policy protecting your traditional private student loans.

The important thing to remember is that ISAs don’t all offer the same sorts of flexibility, or value, because there can be huge variances in long-term costs, so you’ll certainly want to compare different offers against each other before agreeing to any of those that you receive.

How To Satisfy Your Income Share Agreement

By far the biggest differentiating factor between ISAs and a traditional private student loan, other than the protections built-in, is the way they’re satisfied.  With an ISA contract, there are three distinct ways you can finish your ISA program: 

1. Make the Required Number of Payments

With an ISA, you pay back a percentage of their future income each month for a set number of months. Each of these payments is considered one of your Required Payments. If you pay all the Required Payments, your ISA amount is satisfied! 

2. Pay the Max Payment Cap

The Max Payment Cap is built into your ISA and is the most you’ll ever need to pay towards your ISA. It is a built-in protection for high earners so that they are not punished for earning more than expected. A Payment Cap is usually some amount more than the Funded Amount (the amount the school is fronting you for their program as part of your ISA). Once you hit your Max Payment Cap, your ISA is also satisfied!

3. Reaching the End of the Payment Window

The final way to end an ISA is by reaching the end of the Payment Window. The school or lender with who you have an ISA with will have a set time period to collect your Required Payments or Max Payment Cap. However, if you have not reached either of those two and the Payment Window ends, you’re absolved of your ISA.  

To read a more in-depth version of how to finish your ISA payments click here

Income Share Agreements VS. Traditional Private Student Loans

Traditional Private Student Loans 

With traditional private student loans, you’re obligated to make your payments whether you have a good-paying job or not. A bill comes in each month and if you can’t pay, your options are limited. Traditional private student loans also accrue interest over time meaning that your payments will increase as time goes on. 

Income Share Agreement

If you are unable to get a job after graduating, with an ISA obligation, you’re given flexibility with your payments. If you’re making less than what you and your school agreed upon (called the Minimum Income Threshold) or are unemployed, your payments are paused. You don’t have to make payments until you’ve found a job making above that income threshold. Students enrolled in an ISA will only pay back money if they are earning over a certain amount, and those who are very successful will never pay back more than a capped limit. Income Share Agreements also do not accrue interest. 

For more ways an Income Share Agreement and a Traditional Private Student loan differ check out this blog post.

What Schools and Programs Offer Income Share Agreements?

All sorts of schools are beginning to offer ISAs, including traditional 4 year colleges and universities, online-only educational institutions, and a variety of bootcamps and career training programs.

Here’s a quick (but not exhaustive) list of schools and programs that offer ISAs

 

The Benefits of An Income Share Agreement For Programs and Schools

1. Increased accessibility for students 

Colleges, Universities, and bootcamps alike are using ISAs to add more options to increase accessibility for students. Institutions implementing ISAs typically use them to fill funding gaps for students who have exhausted their federal financial aid options, or who may be debt averse. 

Income Share Agreements also assist those who cannot access federal financial aid, especially anyone attending alternative education, like coding bootcamps. Students interested in bootcamps or alternative skill-training programs can’t access federal financial aid since these programs are currently ineligible for Title IV funding.

2. Increased Enrollment

Related to point number one, another advantage of offering an ISA as one of your financing options is that it fills empty seats that a school might otherwise not be able to fill through traditional educational financing. Because Income Share Agreements increase accessibility to students, 4-year colleges are able to increase enrollment and fill empty seats. With an Income Share Agreement, schools can offer an alternative financing option to those who may be hesitant to take out a traditional private student loan.

3. Aligned Risk Between Schools and Students

With many traditional private student loans, the student takes on almost all the risk of the debt. With an ISA schools are able to confidently signal to students that the skills the student will learn through their program will allow them to find a job in their field, or gain enough skills to find another suitable position. This also adds to the school’s credibility and shows they are willing to share the risks and rewards with the student. 

The Benefits For Students

1. Deferred Tuition 

Although ISA contract terms vary, most Income Share Agreements allow you to go through the program without worrying about paying for it until you have an income post- graduation. This helps students to focus on school and getting the education they need without having to make payments while studying or needing to have a large amount of money saved up before beginning their first semester. With an ISA you’ll only start making payments after you graduate and once you get a job, and you usually do not owe anything until you earn over a certain amount. This means that you will only pay if your education leads to success in the job market. 

2. Consumer Benefits

Unlike with a traditional private student loan, you won’t have a fixed payment hanging over your head with an Income Share Agreement. Because an ISA is linked to your pretax, monthly income by a percentage, if your first job after college earns you less than the minimum income threshold, you won’t have to worry about making payments. 

This is because ISAs typically have something called a Minimum Income Threshold that you have to meet before payments start. If your income ever drops below that point, your payments are paused until you are earning above that threshold. Your payments aren’t due if you lose your job, after all you can’t owe a percentage of your income if you have no income. This additional flexibility is a great benefit of Income Share Agreements.

ISAs also have a maximum payment cap which limits your total financial commitment. The max payment cap is the absolute maximum payment you could pay towards your ISA obligation. Your total payments will never exceed this cap and if you do reach the cap on your payments, your ISA obligations are done!

As described above, the consumer benefits included with an Income Share Agreement are there to assist students during their repayment period and help to remove compounding interest that seems to never disappear. 

3. Off-sets Risk for Students 

ISAs off set risks for students because they have the potential to protect students from paying for educational experiences that don’t create value for them in the labor market. Income Share Agreements help to shift some of the risk of poor workforce outcomes away from students, and to produce better outcomes by helping to balance out the risks associated with educational financing. In the future, ISAs can potentially help change how education providers keep their curriculum relevant and up to date with the current workforce, so students can enter the workforce effectively.

Click here to read more about the benefits of ISAs for students. 

Scholarly Articles and Content on ISAs

Looking for further information on Income Share Agreements?  Below is a list of scholarly content and additional resources for further information.

Wikipedia

Federal Reserve Bank of Philadelphia, Discussion Paper on ISAs

The Future of Income-Share Agreements, by Sheila Bair and Preston Cooper, published by the Manhattan Institute

Income Share Agreements: How They Work and Their Place in the Federal Regulatory Regime, by Maria Earley, Reed Smith LLP

An Economic Perspective of Income Share Agreements, published by Congressional Research Service

 

Other Resources for Income Share Agreements

Student Story

To help illustrate all the best parts of an Income Share Agreement, here’s an story that follows a student’s ISA journey from start to finish. 

ISA Podcasts

We’ve put together a list of some of the best ISA podcast episodes to help you learn more about the amazing innovations taking place in higher education today.

 

What to look for in an ISA product

When it comes to offering your own Income Share Agreement at your program, it can be difficult to know where to start. It’s important to have the right tool to carry out the program. One that can manage and keep track of all of your students as well as their payments. It may seem difficult to know what to look for in a good ISA management tool. We hope that this guide is useful in clarifying what makes a great Income Share Agreement product. 

 

Things to know Before Offering Your Own Income Share Agreement 

Advocates say the financing method puts more responsibility on the school to help students succeed, and provides an alternative to traditional private student loans and debt. Before you offer an Income Share Agreement it’s important to take several factors into account, so we’ve compiled a list of things you should do before creating your own ISA program!

 

Income Share Agreement Calculator 

Before you sign an ISA contract it’s a great idea to know exactly how your payments will look for the entirety of the contract. Take a look at this calculator to make sure you know exactly what your payments will be. 

 

Careers for Students

An ISA is a terrific tool to consider as you pursue higher education. Although it can be a wonderful option for many students, it’s not the right path for every student.

While Income Share Agreements sound promising, there are some things to consider. Here’s what you need to know depending on your career path, before deciding on which financial aid route to take.

Hopefully this in-depth guide to Income Share Agreements has helped you understand them better. If you have any more questions don’t hesitate to reach out to us. We’re happy to help! 

What Meratas Can Do For You

Meratas provides a full-service SaaS Platform for Schools and Skills-Training Courses to design, administer, and service custom ISA programs. We help institutions create impactful ISA programs designed to promote student accessibility and increase enrollment.

Our programs are intended to incentivize students, schools, and capital providers to work together to promote and finance only the best educational programs that lead to more successful careers.

If you’re interested in offering an ISA option at your school or program that has been proven to increase student enrollment, there’s no better time to offer one then now! Click here to schedule a call with one of our ISA specialists and get your ISA program up and running today.

Are you a student and don’t have an ISA option at your school? Want one? Let us know here so one of our ISA specialists can reach out to your school!

Looking for the best online training programs that offer ISAs for financing? Check out our Student’s page. Meratas is also the number one resource for all things ISA so if you want to learn more, check out our Blog!

Although every effort has been made to provide complete and accurate information, Meratas Inc. makes no warranties, express or implied, or representations as to the accuracy of content contained herein. Meratas Inc. assumes no liability or responsibility for any error or omissions in the information contained herein or the operation or use of these materials. Copyright 2021

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Posted under: Tuition Options, Income Share Agreements

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