Income share agreement (ISA).
In plain English
An income share agreement, or ISA, funds education in exchange for a fixed percentage of the student's future income over a set number of payments, rather than a loan with a fixed balance and interest rate. Payments rise and fall with earnings, and many ISAs pause when income falls below a floor and cap the total or the number of payments. The catch is that a high earner can end up paying back far more than they received, and consumer protections are thinner and less standardized than for federal student loans. It is a fundamentally different structure from a loan, not just a different rate.
01Why it matters
An ISA shifts the risk and the total cost in ways a fixed loan does not, so understanding that you are pledging a share of future income, possibly more than you borrowed, is essential before signing one.
02The math, step by step
Instead of borrowing a set amount, a student agrees to pay a percentage of their income for a fixed number of months after graduating. Earn a lot and the payments, and total repaid, can exceed a comparable loan; earn little and they shrink, sometimes to zero for a stretch.
03What this is NOT
It is not a standard loan. A loan has a fixed principal and interest rate; an ISA takes a percentage of income for a set term, so the total repaid depends on future earnings and can be more or less than a loan for the same amount.
04Receipts
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