Income Share Agreement Example

An income share agreement (ISA) is a financial arrangement between a student and a financier that allows the student to pay for their education by promising to pay back a percentage of their future income for a fixed period of time. These agreements are becoming increasingly popular as a way to finance higher education, particularly in fields like coding bootcamps and other technical programs, where graduates can expect high salaries upon completion of their studies.

An ISA can be a great choice for students who might not otherwise be able to afford the upfront cost of tuition, since payments are tied to their future income and only kick in once they are earning a certain amount. However, it`s important to carefully evaluate any ISA agreement before signing on. Here`s an example of what one might look like:

Income Share Agreement Example:

Agreement Date: [Date]

Financier: [Name of finance company or investor providing funds]

Student: [Your name here]

Program: [Name of the program or school you are attending]

Tuition: [Total cost of tuition and other fees for the program]

Length of ISA: [Number of years you will be making payments]

Percentage of Income: [Percentage of your future income that you will be repaying, e.g. 10%]

Minimum Income Threshold: [The amount of income you must earn before payments begin, e.g. $40,000 per year]

Maximum Repayment Amount: [The maximum amount you will ever have to pay back, even if you earn a very high salary]

Terms and Conditions: [A statement outlining the terms of the agreement, including any penalties for late or missed payments, any grace periods, and any other important details.]

By signing this agreement, the student agrees to repay the financier a percentage of their future income for the specified length of time, up to the maximum repayment amount. Payments will begin once the student has reached the minimum income threshold and will continue until the end of the repayment period. In the event of default or late payment, the student may be subject to penalties or legal action.

While an ISA can be a great way to finance your education, it`s important to carefully evaluate any agreement before signing on. Make sure you understand the terms and conditions, including the repayment percentage, minimum income threshold, and maximum repayment amount, as well as any penalties for late or missed payments. With a little careful consideration, an ISA can be a smart financial choice for many students.