Income Share Agreements

Income Share Agreements are an excuse for education companies and colleges to charge a lot more money than what they truly deserve. A better way to do this would be to charge companies when they want to hire fresh graduates.

High tuition fees are unjustifiable, because knowledge has become cheap. The internet is filled with wonderful study materials, books, videos and tutorials. In such an environment, the marginal cost of a new study material that your college/bootcamp/(whatever new fancy thing they like to call them these days) provide is negligible (close to zero).

Private companies are utilizing ISAs (Income Share Agreements). If your ISA says, we will take x percent, of your salary for first two years of your employment, your educators have incentives to actually get you a great job. Which is good for you and good for the market. Incentives of consumer and producer are aligned.

But now all these expensive universities have started using ISAs. Because students don’t have to pay right now, they don’t realize the fact that they are being charged way too much money. It is same as the trap of loan. If there were no education loans, how many students would be willing to pay these exuberant prices? Much less students. Would that make colleges/bootcamps lower their prices? Significantly.