-Attributed to Prateek Shukla, Co-founder and CEO of Masai School
Concerns about the increasing cost of higher education continue to be a topic of social-
economic debate all over the world. Access to quality education has always come with a
cost, posing the challenge of affordability and making for an uphill climb for many aspirants.
Many young people believe that attending a conventional university is the best way to
secure a stable job and a bright future and that they have no choice but to take out student
loans to get ahead. It is for this very reason that the 2019 Indian students’ debt statistics
showed that the loan dispersed to students in that year amounted to 22,550 CR. However,
this is not the case for many well-deserved students who come from less affluent
backgrounds. There are many facets to education loans that make it difficult for these
students to avail loan facilities and eventually get admitted into reputed institutions.
Given that the cost of higher education continues to rise, putting an enormous financial
burden on young adults all over the world, it’s time to reconsider how we finance education
and shape the future of jobs. Addressing this challenge is the Income Sharing Agreement or
ISA as it is popularly known which is key in opening up multiple learning opportunities for
aspirants across various strata of society.
What is ISA and how does it work?
The Income Share Agreement (ISA) is a financing mechanism in which a learner signs up for
a program free of cost, and later (i.e. once the learner gets a suitable job) pays back the
service provider the required sum of the course fee. The revolutionary financial
arrangement ensures that the learner does not face the burden of sky-high course fees
while at the same time gets sufficient time to fulfill the clauses of the ISA. Typically, Income
Share Agreements come into effect only if the borrower is able to secure a job opportunity
upon completing the course that pays a minimum salary amount. ISAs have great potential
to alleviate the current financing hurdles faced by students in developed as well as in
developing countries. They could, also, serve to finance students in emerging economies
wanting to study in developed countries and reduce a perceived obstacle to access to
education for all. Income sharing arrangements provide a “win-win” arrangement for both
the service or the education provider and the borrower.
Benefits of ISA
·Capped Amount for Payment: For income-sharing agreements, the amount which
the student pays back is capped at a certain agreed-upon amount. For instance, you
may agree to give 15% of your salary for 3 years in exchange for your education, but
if you reach the cap beforehand your income share agreement ends.
· No Up-Front Fees: Except for a small fee, most ISA contracts do not entail any
upfront payment for the educational service provided. Unlike the existing university
model, which does not guarantee any particular outcome upon graduation, the no
upfront cost model puts a significant amount of obligation on the institution to
achieve the outcomes it promises. Overpromising or failing to offer high-quality
education would only hurt their opportunity to prosper as a company that values
creativity and excellent customer service.
An ISA aims to give people a better way to invest in their education than what is currently
available, one that is led by accountability and transparency.
Finally, should one enroll into an Income Share Agreement?
There are several advantages to an income share agreement. The learners’ choice of the
institute, fees/cost of higher education, and their financial situation may help in deciding
whether an income share agreement is right for them—or whether it’s better to choose
traditional student loans.
In conclusion, ISA is an important institutional innovation that can certainly increase the
pool of skilled labour in an economy and change the future of education and workforce.
Prateek Shukla, Co-founder and CEO of Masai School