Quick Answer: Income Share Agreements (ISAs) may seem appealing, but they can be overpriced compared to traditional student loans, as repayment is based on a percentage of your future salary without adjustments for raises. They are also largely unregulated, leaving students vulnerable to predatory lending practices and weak legal protections. Additionally, discrepancies in eligibility criteria can lead to discrimination, making ISAs less equitable for students from different backgrounds.
Income Sharing Agreements (ISA), a contract wherein a student’s tuition fee is paid or covered by a lending party in exchange for a percentage of his/her future salary for a defined period, is gaining popularity across the United States. With the IT industry offering one of the most stable and high-paying jobs, it’s no surprise that more and more coding boot camps are welcoming and applying this concept.
For a typical coding Bootcamp setup, ISAs usually operate like this: an individual will be allowed to start the program with little to no payment at all. After the student successfully graduates from the boot camp and gets his or her first tech job, he or she will then be required to pay 10 – 15% of his or her salary for 2-4 years.
This may seem like an advantageous option at the beginning, but these top 4 disadvantages may outweigh the perks:
1. It’s Unnecessarily Overpriced
When you compute ISAs compared to traditional federal and private student loans, ISAs, in the long run, seem to be an overpayment for most programs. Since you won’t be able to determine the exact amount of your future salary, you can only agree to how many percent of it you’ll be paying. In addition, while ISAs claim to be free of interest, the fixed percentage it will require from your salary will not be adjusted if you get a raise during your payment period unless it reaches the set payment cap. It is important to always remember that investors in ISAs are here to make money more than to be of help. As Ed Surge writes, ISAs are highly prone to deceptive marketing and predatory lending terms.
2. It’s Still Highly Unregulated
The risk gets higher for interested applicants since to this day, ISAs are still largely unregulated by the federal government and the states due to the concept being relatively new. Long-term financial commitments should be subject to protection laws to prevent lenders from abusing the agreement. If any crippling issues arise, students who participated will have weak to no grounds to support and defend their side. A great example of this is the claim of ISAs that they are an alternative to loans. The Consumer Financial Protection Bureau, later on, opposed this, stating that ISAs are indeed a type of student loan.
The inconsistency in the set standards of who will be eligible for ISAs makes interested individuals subject to discrimination. For instance, an ISA for one person may have different terms than with a different person. A study from the Student Borrower Protection Center revealed that those who attended historically Black colleges and universities paid more than those of other racial backgrounds. This makes the success stories of ISA participants less credible.
4. Career Success Commitment
We promise to actively support our students for up to 18 months following the completion of the apprenticeship program. Our goal is to ensure you not only complete our training but also secure a position that aligns with your skills and career aspirations.
What is an Income Sharing Agreement (ISA) and how does it work? An ISA is a contract where you pay a percentage (usually 10–15%) of your future salary for a set period (2–4 years) after getting a job. It lets you start a program with little to no upfront cost, with payments starting only once you're employed.
Why might an ISA cost more than a traditional loan? Though ISAs seem interest-free, you could pay much more over time, especially if you land a high-paying job. Since repayment is based on income, total payments can exceed the program’s value, especially without salary-based adjustments or payment caps.
Are ISAs regulated by the government? ISAs are still largely unregulated, making them risky. Without clear protections, students may struggle to challenge unfair terms. The Consumer Financial Protection Bureau has stated that ISAs are essentially a form of student loan despite claims otherwise.
Can ISAs be unfair or discriminatory? Yes. ISA terms often vary per person, which can lead to unfair treatment. Research shows that students from historically Black colleges have sometimes paid more, raising concerns about bias and inconsistent eligibility standards.
Sil brings a wealth of experience to her writing and editing projects. After nearly a decade guiding college students in research and communication, she shifted her focus to freelance writing and editing. Her passion for education continues through volunteer work, where she empowers others by teaching research and writing skills.
