[Investors] could “buy” a portion of a person`s income prospects: to give them the means to finance their training, provided they agree to pay the lender a certain portion of their future income. In this way, a lender would recover more than its initial investment of relatively successful people, which would compensate for the failure to recover its initial investment from the unsuccessful. Suppose your ISA requires you to pay 5% of your post-degree income over a 10-year repayment period. If your salary started at $52,000 and increased by 4% each year at age 10, you first paid $217 per month and a total of $31,216. If this ISA required 18% over two years, you would first pay 780 USD per month and a total of 19,904 USD. “We are designing revenue participation agreement programs to complement some of the strategic objectives identified,” deSorrento said. Rhetoric and headlines often suggest that income share agreements are an important part of the solution to students` dizzying debts. But organizations that make ISA a local reality for university students may be more cautious with the new model. The public debate on the Oregon plan has sparked renewed interest in equity-based funding models, including a major summit on The New America Foundation`s revenue engagement agreements and a strategy paper from the American Enterprise Institute. On April 9, 2014, Senator Marco Rubio announced the introduction of legislation in the U.S. Congress that would “expand” the use of income participation agreements.
  [must be updated] “No one has a problem with income agreement and on the part of a university. They have another problem that they are trying to solve,” said Tonio DeSorrento, CEO of Vemo Education. The loudest voice who has voiced concern about ISAs is Senator Elizabeth Warren, the Massachusetts Democrat who was running for the party`s 2020 presidential bid. In June, Warren and other Congressional Democrats asked several colleges associated with Vemo to provide documents on their promotion of income participation agreements and student protection. For example, Align Income Share Funding says you can pay an ISA for home repair, debt consolidation, a medical bill or even plan your wedding. I`m not sure I`m going to make a participation agreement for most of these things. They are traditionally used to invest in what is called human capital, our ability to make money by getting more education. Another name for income participation agreements is the human capital contract. Michaels explained that the ISA`s conditions for stride funding include a minimum income threshold of between $30,000 and $40,000, depending on the student`s curriculum. She also pointed out that typical student loans have rigid payment plans that require payment regardless of living conditions, including unemployment and family vacations. With an ISA, your payments will be suspended without penalty if you experience some form of hardness and restart once you get back on your feet. Julie Margetta Morgan, a Fellow at the Roosevelt Institute, said the lack of comprehensive data on the outcomes of income participation agreements is just one of the areas where contract information and research is lacking.
It is not clear, she said, how many colleges impose binding arbitration regulations or when a student is considered to be late under the treaties. It is also unclear what the typical ISA owner earns after university or what his repayment obligations look like, she said.