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.