Income-Share Agreements Are on the Rise. Do They Work?



Among for-profit programs, in 2012, App Academy, a coding bootcamp with locations in San Francisco and New York, began offering a twelve-week program built around an ISA. Others, like the New York Code + Design Academy, which provides a range of web engineering and design courses, and Holberton School, a two-year program in San Francisco, have similar payment options.  

General Assembly, a popular for-profit tech bootcamp, offers tuition financing through private lenders like Climb, but Jake Schwartz, the CEO and a cofounder, said he wants better payment options for students with poor credit. General Assembly recently piloted an ISA option with thirteen students, some of whom are still job-hunting. Once they are making at least $35,000, they will pay back 6.5 percent over five years. Schwartz said General Assembly is soon planning a broader rollout of the ISA option, to see whether ISAs can work on a larger scale and for a broader swath of the population than they currently do. “Right now, it’s sort of the Wild West,” Schwartz said.

This all comes at an opportune time. There are more than 550,000 open jobs requiring computer-science skills, while fewer than 50,000 computer-science majors entered the workforce last year, according to an analysis of federal labor data by, a nonprofit that seeks to expand programming instruction in K-12 schools. Leaders of the ISA-based training programs see a business opportunity in the Lavell Burtons of the world—promising individuals without access to cash or credit for tuition. They are betting they can groom them, over the course of a few months, into tech professionals who command competitive compensation in a hot job market. And then take a cut.

The ISA-based programs have generated hype, as well as some early success stories. Yet questions remain about whether they are a good deal for students and if they make for profitable businesses in the long run. For one thing, there’s little consensus around how much is fair to reap from program graduates, and for how long. Lambda School, for example, requires graduates earning at least $50,000 to pay back 17 percent of their salary for two years, with total payments capped at $30,000. The terms can vary widely among programs.

Also, while it’s clear how programs like Lambda School might help some people improve their prospects, many of them are so new—Lambda School is one year old this month—that there isn’t much data about how people do once they get through the programs. That makes it difficult for prospective students to evaluate them.

Pathrise, a remote, part-time program that started offering an ISA option in January, helps software engineers and others polish their job-search and interviewing skills. Graduates making at least $50,000 agree to pay back 7 percent of their salary for one year. The reasoning, according to Kevin Wu, a Pathrise cofounder: “We help you get a job that’s at least 7 percent better than the job that you could have gotten.” Perhaps—but with just a few dozen graduates to speak of, some of whom are still job-searching, signing on is still somewhat of a gamble for early participants.

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