As soon as you enter your college campus or get accepted to a university, education consultants are most likely to offer you student loans and similar options to finance your college education. It is almost like a procedure of sorts, because it is common knowledge to know that majority of students in America are seeking the best means to pay for their education.
College loans are popular among students but not everyone is qualified or able to meet the eligibility requirements. To remedy this issue, universities and colleges are presenting a new college financing concept: the Income Share Agreement.
Technically speaking, an Income Share Agreement sis a contract between you, the student, and your college or university. Under this agreement, you receive funding for your tuition fees and pay it back by awarding the school a “share” or percentage of your income after graduation.
This college loan alternative is being encouraged and promoted by a lot of universities and educational institutions recently. Because of claims that it works better for students than most traditional college loans, it is gaining a lot of attention.
Let’s examine what an Income Share Agreement is all about and what it entails.
Considering an Income Share Agreement? Here’s What You Need to Know
Before you make any decision about financing your college education, you must have ALL the information about the financial aid options that are made available to you, such as the Income Share Agreement.
One major thing to consider is that as you increase your salary, your payable amount will also be increasing. As you progress in your career, a part or portion of that growing income of yours will go to the college fund that you signed for up in the ISA.
ISAs incentivize college programs so they design their curriculum toward a positive career path for students, and secure their financial success. The ISA college financial assistance model is widely known as an alternative to private student loans. This type of financing solution is also commonly offered by trade schools and vocational program institutions.
Remember that the percentage rate for the Income Share Agreement is fixed. Unlike in student loans, the fixed percentage rate of ISA will account for security on your end. It is off-putting for most people that student loans incur interest rates that accumulate when the loan is paid late. Fortunately, this is not the case with Income Share Agreements.
Furthermore, you also need to deliberate carefully that colleges usually award to loan you up for a maximum of 15% of your projected income after graduation. Therefore it is crucial at this point to do the math and compute your total college education cost and if choosing this financial aid pathway is relevant and sufficient for funding it through and through. Otherwise, if your computations do not tell you so, then it’s time to let it take a back seat and find better options.
The Long-term Effect of an Income Share Agreement
What is the impact of the Income Share Agreement on your future earning or financial status? New graduates who have just started with their careers are not immediately able to pay off their college student loans. This, too, is the case with the ISA. If your career plans need to take a back seat because of other obligations and other bumps in the road, you’ll encounter delays in paying back the money owed in the agreement.
Only when you start to really understand all the facts and possibilities as they relate to this option will you be able to view a clearer picture.
Unsure About Income Share Agreement? Here’s What You Should Do
Don’t overthink or give up just yet! Make smart comparisons between a student loan and an income share agreement—and decide which option will cost less for your college education.
Experts encourage college students to forecast their post-graduation salary You might want to take a look at the median salary usually earned by people who completed your major. Some universities and colleges have information about their alumni and career statuses. Using these facts, gain insight into the possibilities for you, career-wise.
Use data from the Bureau of Labor Statistics for a glimpse into your future career path and industry. Take advantage of this resource’s accurate and updated career estimations and official industry forecasts. Equip yourself with this information and anticipate your financial situation by the time you will be required to pay based on your Income State Agreement.
Last but not least: do the math! The barrage of information from all reliable sources may always be enough. Exercise due diligence by making mathematical estimates, and getting an assessment from your chosen university or college.
A student loan and an Income Share Agreement share similarities, and are aimed at helping students pay for their education. They differ, however, in terms of price range and interest rates. Choosing which one works better for you depends on your need and financial situation at present and in the future. Study each option very carefully, and seek advice from experts!