The Jain Family Institute

Work

Income Share Agreements

The higher education system is afflicted by a crisis of quality, affordability, and access that belies its increasingly pivotal role in building an equitable and just society.

Income Share Agreements (ISAs) are an alternative to student debt for financing higher education in which students agree to pay a percentage of their income for a fixed period of time rather than paying principal and interest. Unlike traditional loans, ISAs adjust with the students’ ability to pay— if students earn less, their payment obligations are lower. If they earn more, they pay more.

By aligning the economic interests and destinies of investors and students, ISAs can address a broad array of issues in the education system, including:

  • Increasing access to capital

  • Ameliorating burdensome debt loads

  • Incentivizing holistic student support systems

  • Rewarding academic programs that produce positive student outcomes.

For students, ISAs are a financing alternative that lacks the downsides of traditional loans – opening doors for funding that might not otherwise be available or feasible. To investors, ISAs are a financial product that can generate powerful commercial and social returns.



Pilot funds

JFI has developed expert capacities in capital structuring, program design, fundraising, and ISA underwriting. Through this process, JFI incubated and spun off a nonprofit social enterprise called Better Future Forward dedicated to the formation, execution and growth of ISAs. Together we build pilot programs to prove out new applications of the ISA model, to demonstrate its commercial viability and social impact, and to lay the foundations for future scale. 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 provided more than $10 million in ISA financing to over a thousand students in Colorado, Washington, D.C., Minnesota, Illinois, and Wisconsin, at institutions that range from General Assembly to UW-Madison.

View ImpactAlpha’s coverage of the Chicago, Minnesota and Wisconsin programs here.

Public policy

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 sensible 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.


Better Future Forward

BFF.png

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.



Michael Stynes