Are you in dire need of money for college? Has it been difficult to obtain scholarships or hardship funds from your university? Traditionally, if you needed funds for college you either saved your own money or you searched hard for scholarships, grants or loans, but what if there was another option? Smaller lending institutions such as Lumni and Upstart have tried a new approach to providing funds to college students over the years and have found great success in their approach. What they are now using is called an Income-Share Agreement (ISA) and this just may help you pay your way through college.

What Is An ISA?

At first sight, ISA programs look similar to loans. When you sign up for one, you are given money for your tuition, but the difference between a loan and an ISA is that you do not agree to pay the money back. Instead, you simply sign over a percentage of your income the day that you get a job after you graduate, and you keep paying for a specific number of years. When the payment period ends, you no longer owe anything. If you made a huge salary, the lender is likely to make a profit, but if you made very little they are likely to lose money. There is no fixed sum of money that you need to repay, no matter what your life circumstances.

How Much Do You Stand To Get?

Certainly, ISAs don’t pay your entire tuition. They pay a fraction that is based on the income that the lender projects you will make, given your choice of major. An engineering student could hope to make about $60,000 a year starting out, and would most likely get a $15,000 ISA. This engineering student would need to pay about four percent of his income each year for eight years. It would amount to $20,000 in the end, giving the lender a $5,000 profit… but if this person languishes in a poorly paid job, this person will end up paying much less.

As another example, an English major would make about $35,000 a year and would receive no more than $10,000 in ISA assistance. This person would pay back $12,000 over eight years. If the person were to find nothing but poorly paid jobs, he would end up paying much less, which was the same case for the engineering student.

Most students who are introduced to ISAs find very little information on them, so they default to choosing loans, which is the more familiar option. The ISA system points to a future where financing education is far less difficult than it’s been in the past, so if you are having difficulty financing your education, make sure to check it out this option today.