Future-Proof Your Financial Aid Program with Income Share Agreements (ISAs)

Changes in education policy will impact institutions of all types and sizes. What’s the solution? Download this whitepaper to find out.

Income Share Agreements (ISAs)

A new, outcomes-based solution is needed to finance higher education.

Income Share Agreements (ISAs) enable students to finance their education or fill a gap in school financing by agreeing to make payments after graduation based on a percentage of their income for a set period of time.  The rate is typically set to ensure payments are comparable to a private student loan.  A forward-looking, income-based student financing product better aligns the cost of an education with the value a student receives from the education. Despite empirical data proving otherwise, students and families are beginning to question whether higher education is worth the price.

What You Should Know

Because current college payment alternatives only evaluate families ability to pay based on past performance there is no transparency to a student’s potential return on investment.  For example, what did previous graduates with the same major do with that degree? Would greater transparency to outcomes and education results broaden consumer information, lead to more informed decisions, and improve school accountability? Is there a way to value an education based on outcomes?  Income Share Agreements are a new way to finance an education by committing a percentage of future income. Here is some important terminology you should know:

Funding Amount

The cost of education provided by the school or the difference between the cost of education and the family’s expected contribution including traditional alternatives such as loans.

Monthly Payment

The agreed upon income share multiplied by the amount of the student’s monthly Gross Earned Income.

Earned Income

A person’s total wage and self-employment income.

Payment Term

The term, measured in months or years, during which a fixed percentage of Earned Income is paid. In certain situations, such as underemployment or unemployment, the Payment Term may be extended and the monthly payment will be $0.

Payment Cap

The maximum amount paid by a student over the Payment Term pursuant to an Income Share Agreement (ISA).

Why consider an ISA Program for your school?

  • Finding alternatives to traditional debt is an emerging consumer trend.
  • Student need is ever escalating, as is student loan debt, while long term competitive loan alternatives are diminishing.
  • ISAs offer a transparent method to fund higher education that more appropriately aligns risk and outcomes.

Contact Us

For schools interested in learning more about ISAs, please contact our Business Development Team by calling 619-684-7237, emailing isa@goalsolutions.com or use the form below.

The History of ISAs

1955

Milton Friedman proposed students should be funded through “equity investments such that [Investors] could ‘buy’ a share in an individual’s earnings.”

1970s

Yale University modified Friedman’s proposal, requiring all participants to pay back a percentage of earnings until the entire groups balance was repaid.

  • The result was frustrated students being forced to make payments on behalf of other students who were unwilling or unable to repay.
2009

The first to enter the ISA space was Lumni, beginning operations in the United States in 2009. Shortly thereafter, it was joined by 13th Avenue (in 2009).

2012

Cumulus Funding (2011), Upstart (2012), and Pave (2012) enter the ISA space. During this same period, Social Finance, Inc. (SoFi; 2011) and CommonBond (2012) began offering student-loan products that reflected, in part, a “personal relationship” between investors and beneficiaries.

2016

Purdue University launched an ISA program in AY 2016-2017 which will fund over 175 students at almost $2MM.

2017

Goal Structured Solutions, Inc. (“GS2”), in partnership with Make School, becomes the first lender to enhance cash flow opportunities for schools by leveraging Income Share Agreements (ISAs). GS2 recently closed a $2 million credit facility, enabling Make School students to fund their education debt free with ISAs.

What Can GS2 Do For You?

Our clients include schools, investors, banks and hedge funds who seek to more effectively manage their returns, asset performance and compliance. GS2 currently manages over $26 billion of private and federally-guaranteed student loans for its clients and partners. In addition to providing services, GS2 has deployed over $140 million of capital in acquiring over $3.1 billion of performing and non-performing loan portfolios.  GS2, by and through its affiliates, is a licensed debt buyer and debt collector and uses its student loan performance database to analyze value, acquire and manage portfolios.

Capital Markets Advisory Services

Our established, trusted relationships with critical market participants has enabled us to build a robust analytics platform that offers unparalleled insights into student loan performance.

Ascent Program for Funding Education

With the Ascent Program for Funding Education and the creation of custom tuition financing and loan programs for schools, we offer custom solutions for a variety of client and student needs. LEARN MORE >>

Master Servicing to Maximize Results

GS2 provides Master Servicing and Special Servicing to the holders of performing and non-performing student loan debt. We use our expertise to deploy strategies that yield the greatest value to the loan holders.

Contact Our Business Development Team

To learn more about Income Share Agreement (ISA) partnership opportunities with Goal Structured Solutions (GS2), please contact our Business Development Team by calling 619-684-7237 or email us at isa@goalsolutions.com.