Income Share Agreements and Related Programs to Finance College or Career Training

Project

Overview

Project Overview

Income share agreements (ISAs) are designed to help students pay for and attend postsecondary education and career training programs. With an ISA, students receive financial support to help cover the cost of their education and, in return, agree to pay a fixed percentage of their future income over a predetermined time period. ISAs are gaining popularity as an alternative financing vehicle, but there is little research to guide practice and policy.

Although student loans have helped millions of students attend college, federal loans often do not fully cover students’ unmet need, and they are not available for many training programs. Close to five million student borrowers, moreover, are currently in default. Many students never complete their programs, while others attend programs that do not lead to good-paying jobs. These problems are often rooted in historical and systemic racial discrimination and biases, and they disproportionately affect students of color and low-income students.

MDRC is working with multiple partners to learn whether ISAs and related programs to finance college or career training can be viable alternatives to some existing financing options (such as private loans or Parent PLUS loans) and if they can help reduce systemic inequities in higher education and career training. Key goals for this work are to understand whether the programs can: increase affordability and access for students of color and students from low-income backgrounds; improve completion and earnings; ensure transparency and understanding of financial obligations; and create a sustainable and scalable financing model.

With the support of the Ascendium Education Group, MDRC collaborated with the Partnership for Education Advancement to develop an ISA Playbook to help guide colleges and universities implementing ISA programs that are paired with enhanced student supports. MDRC is now working with the Student Freedom Initiative to provide technical assistance to nine Historically Black Colleges and Universities (HBCUs) offering an income-contingent funding option for education costs to eligible students using the playbook. MDRC has also partnered with Social Finance, a nonprofit that develops funding strategies to measurably improve lives, to launch a research agenda for ISA-based programs at career training providers in multiple sectors and places around the country.

STATUS: Current

Basics

Issue: Higher Education, Work and Income Security

Focus Area: Financial Aid, Student Services, Financial Incentives, Job Retention and Advancement

Population: Young Adults

Focus Population: College Students

Intervention: Sectoral Training, Student Services, Tutoring, Mentoring, Career & Technical Education, Counseling/Advising, Financial Incentives, Job Training

Agenda, Scope, <br> & Goals

Agenda, Scope, and Goals

MDRC’s goal is to advance learning and inform practice and policy for ISAs and related programs that are designed to improve outcomes for students of color and low-income students.

ISA Playbook: With the support of the Ascendium Education Group, MDRC worked with the University of North Carolina at Charlotte, Columbia College Chicago, and the Partnership for Education Advancement to develop an ISA Playbook. The playbook includes a series of guides, activities, and tools to help institutions set eligibility criteria, define a target student population, develop educational materials about the ISA program, develop training for staff to help students make well-informed decisions about financial aid options, and implement enhanced student support services as part of the program.

Student Freedom Initiative: MDRC is partnering with the 501(c)3 public charity Student Freedom Initiative, which provides holistic services: (1) internships, (2) tutoring, mentoring, and other student services, (3) HBCU capacity-building, and (4) an income-contingent alternative to traditional fixed-payment obligations, called Student Freedom Agreements. MDRC is providing technical assistance to the Student Freedom Initiative in its roll-out of the Student Freedom Agreements for juniors and seniors majoring in science, technology, engineering, and mathematics (STEM) at nine HBCUs starting in 2021. As an option to Parent Plus Loans, under a Student Freedom Agreement, a student would receive funds to pay for a portion of his/her educational expenses in return for monthly payments in the future that are based on the student’s income after leaving college. These monthly payments are designed to provide an equivalent and perpetual benefit for future students. Using the ISA playbook, MDRC is supporting the design and implementation of the Student Freedom Agreement communication strategy and staff training at participating HBCUs. Lessons learned from our efforts will be used to expand the program to minority-serving institutions with STEM programs that choose to participate in any of the four components of the Student Freedom Initiative’s program.

Career Impact Bonds: MDRC is partnering with Social Finance to design and implement a learning agenda for the UP Fund, a $50 million portfolio of impact investments in Career Impact Bonds (CIBs). The Career Impact Bond is a financing model that provides education and wraparound support services for people looking to upskill or reskill. The Career Impact Bond is designed to advance economic mobility for people who face barriers to education and employment like low incomes, criminal justice involvement, and immigration status. Social Finance is launching 8-12 Career Impact Bonds around the country across a range of in-demand industries, such as information technology, skilled trades, health care, and green energy. The Career Impact Bond brings together financing, short-term vocational training, and supportive services so participants can enroll in training programs at little to no upfront cost. Those who gain employment and whose earnings reach a predetermined earnings threshold following graduation repay program costs through income-based monthly payments with fixed repayment terms and payment caps, all of which are outlined in a Student Bill of Rights. As the learning partner, MDRC is working with students, alumni, staff, and research partners to design and implement a research agenda to study Career Impact Bonds, the student experience, and student outcomes.

STATUS: Current

Basics

Issue: Higher Education, Work and Income Security

Focus Area: Financial Aid, Student Services, Financial Incentives, Job Retention and Advancement

Population: Young Adults

Focus Population: College Students

Intervention: Sectoral Training, Student Services, Tutoring, Mentoring, Career & Technical Education, Counseling/Advising, Financial Incentives, Job Training

Design, Sites, & <br> Data Sources

Design, Sites, and Data Sources

MDRC’s work focuses on: (1) applying evidence-based technical assistance to support programs and (2) designing and implementing a robust learning agenda to learn about students’ experiences and outcomes.

Student Freedom Initiative: MDRC is providing technical assistance to help the HBCUs implement Student Freedom Agreements, design and support communication to students and families, and train HBCU staff. The nine HBCUs are:

Claflin University
Clark Atlanta University
Florida Agricultural and Mechanical University
Hampton University
Morehouse College

Prairie View A&M University
Tougaloo College
Tuskegee University
Xavier University of Louisiana

Career Impact Bonds: MDRC plans to conduct a 10-year evaluation of CIBs, collecting and analyzing data from the participating CIBs about students’ experiences from the point at which they learn about the CIB opportunity through the duration of their ISA repayment period. These data will include student demographics, support service utilization, program experiences, and student outcomes that include program completion, employment and earnings, and students’ program and post-program life experiences. Social Finance has launched CIBs at the following four providers and will add up to eight more:

General Assembly
Acuitus
Alchemy Code Lab
American Diesel Training Centers

STATUS: Current

Basics

Issue: Higher Education, Work and Income Security

Focus Area: Financial Aid, Student Services, Financial Incentives, Job Retention and Advancement

Population: Young Adults

Focus Population: College Students

Intervention: Sectoral Training, Student Services, Tutoring, Mentoring, Career & Technical Education, Counseling/Advising, Financial Incentives, Job Training

Funders & <br />Partners

Funders

Ascendium Education Group, Inc.

Strada Education Network

Partners

Student Freedom Initiative, Inc.

Social Finance

Partnership for Education Advancement

MDRC Staff

Alexander Mayer
Director, Postsecondary Education
Mayer is Director for MDRC’s Postsecondary Education policy area. He directs research studies, develops new projects, and conducts outreach to policymakers, practitioners, and other stakeholders.
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Michelle Ware
Senior Associate, Postsecondary Education
Ware, who came to MDRC in 2006, works predominantly on projects designed to reveal ways to improve college access, persistence, and success for low-income and underprepared students.
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Frieda Molina
Director, Economic Mobility, Housing, and Communities
Molina has over 20 years of experience providing technical and operational assistance to workforce development service providers, and has worked at MDRC for 17 years on numerous workforce development evaluations.
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Hannah Dalporto
Research Associate, Economic Mobility, Housing, and Communities
Dalporto supports MDRC’s career and technical education projects, bringing her experience as both a qualitative researcher and operations specialist to that work.

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Susan Scrivener
Senior Associate, Postsecondary Education
Scrivener has over two decades of experience evaluating education and social programs for individuals with low incomes. She currently focuses on directing projects and doing research on how programs are implemented.
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John Diamond
Director, Data Management and Integrity
Diamond is MDRC’s lead for Data Management and Integrity and a senior research associate for the Postsecondary Education policy area.
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Dorota Biedzio Rizik
Research Analyst, Postsecondary Education
As a technical research analyst for MDRC, Rizik helps colleges and universities use data to provide student services efficiently and successfully.
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Rashida Welbeck
Co-Lead, Equity Collaborative
For over 14 years, Welbeck has been building a body of work advancing research and institutional transformation with a growing focus on equity and cultural responsiveness.
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Sophia Sutcliffe
Research Analyst, MDRC Center for Applied Behavioral Science
Sutcliffe joined MDRC in 2017. As a research analyst in MDRC’s Center for Applied Behavioral Science (CABS), she works closely with public and nonprofit partners applying the CABS approach to support inclusive organizational innovation and change management.
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Clinton Key
Research Associate, MDRC Center for Applied Behavioral Science
Key joined MDRC in 2018. He leads the development and implementation of fast, low-cost, and rigorously tested interventions to improve the outcomes and experiences of lower-income people and communities for MDRC’s Center for Applied Behavioral Science.
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Melissa Boynton
Operating Director, Postsecondary Education
Boynton currently serves as a site development lead and project manager for the Gateway to College Evaluation and as an operations site lead for the Performance-Based Scholarship Demonstration.
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Austin Slaughter
Research Associate, Postsecondary Education
Austin Slaughter is a technical research analyst in MDRC’s Postsecondary Education (PSE) policy area. He manages the technical work—randomizing study participants, collecting and processing data, estimating impacts, and creating data visualizations.

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Erick Alonzo
Research Analyst, Postsecondary Education
Alonzo works in MDRC’s Postsecondary Education policy area, where he focuses on evaluations of comprehensive student support programs aimed at improving community college persistence and graduation rates.
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Kalito Luna
Technical Research Assistant, Postsecondary Education
Luna works in MDRC’s Postsecondary Education Policy Area. He analyzes data on MoCCA, a project to evaluate and refine a program focused improving the success rates of male students of color in college, using a randomized control trial study.
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Xavier Alemañy
Internal Visual Design Lead
Alemañy is a design analyst in MDRC’s Center for Applied Behavioral Science (CABS), where he leads the graphic development of intervention materials informed by behavioral science. He specializes in using a user-centered approach to redesign program and agency communications.
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Melissa West
Research Analyst, Economic Mobility, Housing, and Communities
West serves as a resource manager in the Economic Mobility, Housing, and Communities policy area. In this role, she supports project directors and task leaders with project management by developing and maintaining budgets and work plans.
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Sumner Perera
Research Assistant, Postsecondary Education
Perera is a research assistant in MDRC’s Postsecondary Education policy area. Since joining MDRC in 2021, she has coordinated work on several proposals and projects at various stages of development and provided direct technical assistance to college partners.
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