Higher Education Finance
The higher education system is afflicted by a crisis of quality, affordability, and access that belies its role in building an equitable and just society.
Income Share Agreements (ISAs) are an alternative to student debt in which students agree to pay a percentage of their income over a limited period of time rather than paying principal and interest on a fixed schedule. If students earn less, they end up paying less; if they earn more, they pay more. ISAs adjust with the students’ ability to repay.
We see ISAs as a tool for addressing a broad array of issues in education: from insufficient access to capital and extremely burdensome debt loads, to scant student support and inadequate academic programs. To students, ISAs are a financial aid program that provides tuition funding in exchange for a defined percentage of post-graduation income. To schools and investors, ISAs are a financial product that generates commercial and social returns. Unlike student loans, ISAs shift the risk involved in pursuing higher education from the student onto the investor.
JFI builds pilot programs to prove out new applications of the ISA model and to demonstrate its commercial viability and social impact. JFI’s ISA pilots are devised and operated in partnership with scholarship funds, training providers, education institutions, college access organizations, various ISA companies, and a wide range of philanthropic, impact, and market-rate investors. Each pilot is built to expand the public case for ISAs, rigorously document the impact on students, and generate reliable payments data that sets the stage for scale capital. In 2016, JFI collaborated with Purdue University and Vemo Education to design and launch the nation’s first large-scale ISA program. JFI pilots have since provided more than $10 million in financing to over a thousand students in Colorado, Washington, D.C., Minnesota, Illinois, and Wisconsin—reaching institutions that range from General Assembly to UW-Madison. In the process, JFI has developed expert capacities in capital structuring, program design, fundraising, and ISA underwriting.
View ImpactAlpha’s coverage of the Chicago, Minnesota and Wisconsin programs here.
JFI guides the development of pro-growth, student-centric ISA legislation at the federal level and in state legislatures across the United States. Vital to the maturation of the ISA market are strong consumer protections, clear tax treatment, and robust institutional outcomes data. JFI’s model ISA legislation was introduced in the U.S. House of Representatives by Rep. Jared Polis (D-CO) and Rep. Luke Messer (R-IN) in 2017 and now has 16 cosponsors (eight Democrats and eight Republicans). JFI is currently working with state legislators in six states to advance ISA legislation.
Research and Industry Stewardship
JFI produces theoretical and empirical research on the implications of ISAs as a financing instrument for higher education, expanding academic and popular discourse on returns to education, college affordability, risk preferences, and asymmetrical information. JFI has also constructed the most comprehensive ISA pricing and underwriting engine in existence—combining more than 20 public, private, and academic datasets to model a host of ISA structures, features, and terms.
Better Future Forward
JFI incubated Better Future Forward, a non-profit ISA provider that builds ISA programs aimed at increasing the educational attainment and economic mobility of low-income people. To learn more about Better Future Forward, please visit the BFF website.