Many ISAs also contain reprieve periods, which means that students who do not earn money go inside, and it is only after using all their months of deferral that the duration of their ISA will decrease. For example, if a student has an ISA of two years and a two-year period, the deferral period will first decrease if they earn below the minimum income threshold and, if it expires, the duration of the ISA will decrease. This helps investors maximize their returns and ensures that students who suffer from temporary financial difficulties or unemployment are not penalized by payments. Purdue University in Indiana was the first university to support ISAs in its current form. Yale experimented with an ISA program in the 1970s, although many structural changes have been made to the agreements since then. Purdue University is a public research university founded in 1869 by John Purdue, who donated land and money to create a college of science, technology and agriculture on his behalf. In 2016, Purdue University collaborated with Vemo Education to propose income-participation agreements and created the ISA Back a Boiler Fund. The goal of the fund, led by President Mitch Daniels, a former Indiana governor, was to provide students who had exhausted all available options with the capital they needed to go to college. Purdue markets its ISA program as an alternative to private student loans and high-interest parent-plus loans – a form of loans to federal students – but does not treat the agreements as a full repayment of student debt. Colorado Mountain College (CMC) launched the Suenos Fund in early 2019 in collaboration with Vemo Education. This program is designed to help DACA students and others who are not eligible for federal funding raise up to $3,000 for their CMC training.
The Fund allows students to obtain the money they need for their training in exchange for a percentage of their income after graduation. The money goes to the Fund to help students access CMC services. The $3,000 proposed by the Fund is sufficient to cover education of $2,400 per year, as well as tuition and books for students in the district. Payments begin six months after a graduate student and only if they earn more than $30,000 a year. Students share 4% of their income for up to 60 months, until they reach the payment limit – the same amount they borrowed – or until they reach their ISA. Income participation agreements are not a new approach, although most of the activity in the sector has been limited to the last five years. The leading market leaders in the revenue-sharing agreement have established all of their ISA companies or programs over the past five years. The main accelerator for the success of these market leaders has been the increased student debt crisis and the narrative of developing new options that help schools get more “skin in the game”.
ISAs are not debt-based security and drive incentives from schools and students, and so many companies and universities are beginning to experiment with these agreements to achieve these benefits. In this section, we will examine the key players in the ISA market in all sectors of ISA – university, bootcamps, financial infrastructure and ISA aid – and we will outline their contributions to the market. Blair is a university funding platform that allows students to borrow money for university through an income-participation agreement. Blair allows students to borrow up to $50,000 for university in exchange for a certain percentage of their income for a number of years, depending on the main subject of the students.