Michael HornThought leader creating a world where all individuals can build passions & fulfill their human potential. Author of the national bestseller Job Moves: 9 Steps for Making Progress in Your Career

The Effectiveness of Purdue's Income Share Agreement Program

Name: The Effectiveness of Purdue's Income Share Agreement Program
Uploaded: 2025-10-06T15:50:01+00:00
Duration: 1 min 12 s
Channel: Michael Horn
Description: In this segment, the speaker explains how Income Share Agreements (ISAs) differ from traditional student loans. ISAs require repayment only when the…

6 Oct 2025 · 1 min

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1:12

In this segment, the speaker explains how Income Share Agreements (ISAs) differ from traditional student loans. ISAs require repayment only when the graduate earns above a predefined income threshold, and the repayment amount is a percentage of earnings rather than a fixed amount. The percentage can vary widely—some short‑term bootcamps charge as much as 17% of post‑graduation income, while university programs like Purdue’s charge considerably less. ISAs also have a fixed term after which the obligation expires, removing the notion of a principal plus interest loan. Because repayment depends on the graduate’s success, the ISA provider’s return resembles an equity investment: they earn more when the graduate does well and may receive little or nothing if earnings never exceed the threshold.

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ISA is different in a number of respects, but the main respect is that it is income based, that you are paying on the basis of how much you earn. So students are only making monthly payments if they earn at least a certain income threshold. They're also making payments that are a percentage of their earnings. So if they earn above that threshold that they may pay a certain percentage. It can be, you know, anywhere from a couple percentage points. Some of the through short term boot camps, we're charging pretty high income shares up to like 17 percentage points per. Dues are much lower. And then the last feature of an income share agreement that's unique is that it expires after a period of time. So it's really de emphasizing this idea that you've borrowed a certain amount of money and you need to repay it with principal and interest. And actually operates almost a little more like an equity investment where you're paying on the basis of how well you do. And the person, that entity that gave you that kind of financing, that isa, is going to receive a lot more revenue if you do well after graduation. And they're going to then receive a lot less and they may receive nothing at all if you never earn above that earnings threshold.