Since ISAs are new, edly is publishing its Core Principles in the hope that they will inspire the industry toward best practices that allow for ISAs to flourish as a driver of education affordability, accessibility and quality.
Income Share Agreements (“ISAs”) play a potentially important role in solving the student loan problem while also addressing systemic issues of access, affordability and quality. Many existing education financing options are regressive, expensive and punitive, often creating financial barriers to education. ISAs match students’ ability to pay with deferred tuition payments. Designed properly, ISAs link the cost of education to the value it creates, incentivizing schools toward more responsible, student-centric behavior.
edly agrees that it will:
1) Offer an alternative to private student loans which is both more affordable and more flexible.
2) Ask schools to have financial “skin in the game” to ensure alignment of interests with good student outcomes.
3) Seek tuition funding for all students regardless of the field of study.
4) Never use FICO or similar credit scores because they are biased against certain groups of students and generally not appropriate for young people.
5) Ensure that there is a reasonable minimum income threshold below which students would not need to make ISA payments because it would be an economic hardship.
6) Ensure that there is a reasonable cap on the total amount of payments a student would make (related to the cost of tuition) so that they never pay too much regardless of success.
7) Give students time to find the right job after graduation.
In order to allow the ISA model to fulfill its potential as a viable, high-impact alternative to student loans,
edly asks that students:
1) Use their best efforts to make on-time payments each month as required by the ISA agreement.
2) Report salary and raises accurately and on time as they change as required by the ISA agreement.