College is expensive. What’s even worse, the value seems to be decreasing as the price rises. When you take into account that most people will need to take out loans to front the costs, the term graduate has largely become synonymous with debtor. Most people are willing to risk it under the auspice of their degree helping them get a job that will make paying back the loans possible. However, that is far from a guarantee.
Income Sharing Agreements
There are alternatives to loans that people are familiar with, like scholarships and grants. Then, there are less well-known avenues like Income Sharing Agreements. Instead of students borrowing money straight from a lender, an investor will take care of their educational costs for a percentage of the student’s future earnings for a specified amount of time. The more the student receives from the investor, the higher the percentage and/or the more years the student will have to share their income. The bad news, (if you can call it that) if your income is high enough, you could end up paying more than you would have for a loan repayment. The good news, (again, if you can call it that) if you are unable to find employment, you aren’t on the hook for any money until you do.
In America, ISAs are typically only offered to Juniors and Seniors. This is so the investor has at least some evidence of a student’s earning potential. So if this sounds like something that might work for you or someone in your family, be sure that person is putting their best foot forward the first two years.
The Reality of Investments
ISAs are great on paper and while your education is being paid for. However, should you find yourself in a high paying job, forking over a large percentage of your earnings, the situation can become much less favorable. In fact, looking at it objectively, ISAs bare an uncomfortable resemblance to indentured servitude.
There’s also a logistical problem. The highest achieving students are the only ones most likely to be chosen for a program such as this. Typically, those students have their education financially covered anyway. The majority of grants and scholarships are tailored to them already. That isn’t to say the highest achievers don’t deserve more, it only begs the question, who do ISAs actually help?
Beyond that, what about high achieving students in less lucrative, yet vitally important fields?
ISAs vs Loans
Despite the various issues raised above, it’s hard to refute the fact that it’s better to have ‘debt’ you can pay than it is to have debt you can’t. Income Sharing Agreements are not a perfect solution and they are not for everyone. If you can find one, it may be in your best interest to lock it down, though. Some Universities offer them through the school itself. Otherwise, you’re most likely to find one from through a corporation or private businesses.
We are just here to let you know your options. We want you to make the decision that best impacts your life and improves your future. If that happens to be through Income Sharing Agreements, great! If not, we have a lot of other helpful suggestions all throughout this website, feel free to take a look!