College Tuition Income Share Agreements: A New Way to Pay for College
The cost of attending college has skyrocketed over the years, and many students are struggling to keep up with the rising prices. According to the College Board, the average cost of tuition and fees at a private four-year college in the US is over $35,000 per year, while the average cost at a public four-year college is over $10,000 per year for in-state students. As a result, many students are graduating with massive amounts of debt, which can take years or even decades to pay off.
To help alleviate this burden, a new financing option has emerged: college tuition income share agreements (ISAs). An ISA is a contract between a student and an investor, in which the student agrees to pay a fixed percentage of their income for a set period of time in exchange for funding their education. This means that the student doesn`t have to take out a traditional loan, and instead pays back a portion of their income only if they are employed and earning a certain amount.
ISAs have several advantages over traditional loans. For one, they are not considered debt, so they don`t show up on a student`s credit report. This means that students can avoid some of the negative consequences associated with debt, such as high interest rates and late fees. Additionally, ISAs are flexible, in that payments are based on a student`s income, not on a fixed amount. This means that if a student earns less than expected, they`ll pay less, and if they earn more, they`ll pay more.
ISAs are also a good option for students who are unsure about their job prospects after graduation. Since payments are based on income, students don`t have to worry about making payments if they`re unable to find a job or if they`re working in a low-paying field. This allows them to focus on their studies and launch their careers without worrying about their debt obligations.
However, ISAs do have some drawbacks. For one, they can be more expensive over the long term than traditional loans. Since payments are based on a percentage of income, students who earn a lot of money after graduation may end up paying more than they would have if they had taken out a traditional loan. Additionally, ISAs can be more difficult to obtain than traditional loans, since investors are taking on a higher degree of risk.
Despite these drawbacks, ISAs are becoming an increasingly popular option for students who are looking for alternative ways to finance their education. Some colleges and universities are even partnering with ISA providers to offer them as a financing option to students. ISAs can be a great way for students to avoid the high costs and risks associated with traditional loans, and to focus on their studies and careers instead. As more students and investors become aware of the benefits of ISAs, we can expect to see them become even more popular in the years to come.