Income Share Agreement (ISA)

Vaughn College students can now cover the gap between their financial aid and cost of attendance via an Income Share Agreement (ISA), helping them avoid taking out private loans or working excessive hours while studying. To learn more about ISAs, how to apply, and what a contract would look like, read below.

What is an Income Share Agreement?

An ISA is an innovative financing option where Vaughn College will:

  • cover some or all of a student’s educational expenses, in exchange for
  • the student paying a percentage of his or her income for a fixed term after school.

Instead of taking out a traditional loan, where a student is always required to pay the amount borrowed with interest—regardless of how long it takes to repay—an ISA only requires a student to make payments for a defined term no matter how much the student ultimately pays. After the term is complete, the student’s obligation is over, even if he or she paid less than the amount originally received.

Furthermore, a student has no obligation to make payments when earning below $32,000—and if the student never earns above that amount over the course of the term, he or she never makes a payment. Term lengths are either 8 or 12 years, and the term will defer in years when a student earns below the threshold of $32,000 (if going to graduate school or unemployed, for example), but for no more than five years.

The percentage of income and the number of years you would make payments are based on your contract; please see our ISA calculator for more details.

 

What expenses can I cover with an ISA from Vaughn College?

Students can apply ISA financing from Vaughn College to the student’s cost of attendance, including tuition, fees, supplies, and living expenses. Students may also use money from this program to cover a balance from a prior term, including balances that have created a hold on the student’s record.

 

What benefits do ISAs provide?

Outside of being interest and debt free, ISAs offer protections for students after college as they navigate the workforce:

  • Payments are based on a share (percentage) of income rather than the amount they borrowed, protecting students from defaulting.
  • Participants are not required to “pay back” the amount of money they received as they would a loan; instead, they are required to make payments for a set contract term (usually at 96 or 144 months). A 96-month contract ends after 13 years of the student leaving school, regardless of the total they have paid.
  • Those with low incomes are not bound to their obligation indefinitely as the length of the payment period, or contract term, is capped.
  • To protect those facing financial hardship, payments pause whenever a student’s income falls below $32,000
  • Annual total payments are capped so that the participants earning the highest incomes will be protected from paying excessive amounts.

 

How do I know if an ISA is right for me?

  • Are you a student with unmet tuition needs or gaps in your funding?
  • Are you uncomfortable taking out loans?
  • Do you have a prior balance you need to clear before you are allowed to re-enroll?
  • Are you covering current costs by working during school that you feel as though you are jeopardizing your academic success?

If you answered yes to any of the above questions, and meet the eligibility requirements below, an ISA could be right for you.

Eligible students must:

  • be Juniors or Seniors (by the term for which they’d be receiving financing)
  • be enrolled full time in the term(s) for which they’d be receiving financing and seeking their bachelors* or their A&P aircraft technician certification.
  • have a GPA of at least 2.5 and be in good academic standing.
  • be U.S. Citizens or permanent residents.
  • have completed a FAFSA.
  • Have no significant adverse credit events (though credit score is not a consideration).

* Students in flight programs are not eligible, including management, engineering, and aviation science.

 

Where can I learn more and apply?

 

Further Information

How much money can I take from the fund?

You indicate on your application how much money you’re requesting from the program. The amount of money you can receive depends on three things:

  • You cannot take more than $25,000 per academic year;
  • You cannot take more than your unmet financial need;
  • You cannot commit more than 10 percent of your future income, in aggregate (and potentially less if you have other student debt obligations). This aggregate limit will be divided over the years a student has remaining in his or her program (for example, a junior won’t be able to commit more than four to five percent of his or her income for his or her freshman year).

For more information on the percentage of income you can expect for a certain amount of money requested, please see our comparison tool.

Is there a minimum amount of ISA financing in order to participate?

A student must require at least $2,500 in financing in order to participate.

What can I expect during the application process?

Please see our application page for more information on the application process itself.

Do I need a cosigner to take an ISA?

There is no cosigner requirement to participate in this program.

Am I required to work in a particular field after school?

There is no requirement that you work in a particular field or that you work at all. The Vaughn ISA program is designed to enable you to pursue the career path about which you are most passionate.

When does my payment obligation begin?

There is a grace period of six months after you complete or drop below half-time enrollment at Vaughn College.

How are my monthly payments determined?

Your monthly payments are determined by informal documentation (such as a paystub from your employer) which is used to approximate your annual income. This estimate of your annual income is divided by 12 to set your monthly payment amounts. You will also be required to submit copies of your tax return each year; the income on your tax return for a year determines your final obligation for that year, and the difference between your total monthly payments for that year and your final obligation will be reconciled at that time through a “true up” process.

Does interest accrue on my ISA?

There is no interest that will accrue on an ISA. Your obligation is to pay a percentage of your income for a defined term. The amount you pay—whether it is more or less than what you received—depends on your income during the term, not an interest rate.

What is the maximum amount I may pay to the fund?

If your income is very high there is a cap on how high your monthly payments will go. This cap varies by the year of your contract. To see the specific cap amounts, please visit our comparison tool.

Can I prepay my Opportunity ISA?

Yes, you can prepay (and thus cancel) your ISA. To do so, look up the cap amount for the appropriate year in your contract using the comparison tool. Each payment you make of that cap amount (in addition to your current obligation) will remove one month off the end of your payment term.

Are my payments back to the ISA program voluntary?

Your payments back to the fund are not voluntary. While we believe the ISA program provides Vaughn students with greater flexibility in paying for their education compared to traditional loans, the ISA still creates a financial obligation. Following graduation, you are required to make payments indexed to your income. Because the ISA represents a financial obligation, students should evaluate their options carefully.

Is there a forbearance option if my payments are unaffordable?

If your payments are creating an economic hardship, you may submit an application for an economic hardship forbearance through Better Future Forward, the administrator of Vaughn’s ISA program. If approved, your payments are suspended during the period of forbearance. Your payment term is also extended by the number of months of the forbearance. An economic hardship forbearance is granted for an entire calendar year.

If you are struggling with your payments, you can also request a payment deferral through Better Future Forwad. A payment deferral gives you the option to suspend your monthly payments for up to three months; however, it is important to note that your payments later in the year may be higher if your income has remained the same.

What happens if I take an ISA for more than one year of school?

If you take more than one ISA then your payment obligation when you leave school will simply be the sum of the percentages for each of the ISAs you have taken.

What happens if I’m unemployed or otherwise earning a low income during the payment period?

If you are earning less than $32,000 on an annualized basis during any month of the contract, you will have no payment obligation for that month. If you earn less than $32,000 in an entire year, you have no obligation for that year; however, your payment term will be extended by 12 months (or a proportional number of months if you’re in the first or last year of your term and it covers part of the year). Your payment term cannot be extended more than five years.

What happens if I go to graduate school?

Your decision to attend graduate school has no effect on your ISA. However, if your income decreases while in graduate school, your ISA will flexibly adjust your payments so that they remain affordable. If you are making less than $32,000 a year (adjusted over time for inflation) while you are in graduate school, you will have no payment obligation. For the years in which you have no payment obligation, your term will be extended on a one-to-one basis.

What happens if I change my major?

The terms for your ISA are determined at the time you take the financing. Once you’ve accepted financing for a given semester or academic year, your terms will not change even if you change your major. However, if you wish to take additional ISA financing in the future, the terms for that financing will be determined by your new major.

Are there any risks or drawbacks to participating in this program?

Your obligation with a Vaughn ISA is to make payments linked to your income over the payment term. This provides protection to you when your income is low. When your income decreases, your payments will decrease proportionately. However, the opposite is also true. When your income increases, your payments will also increase. If your payments increase, the ISA aims to keep your payment manageable because your payments will represent the same percentage of your income. In addition, we place a cap on the amount you are obligated to pay back to the fund.

What might my ISA agreement look like?

We encourage students to review our sample agreement and to contact Vaughn or Better Future Forward with any additional questions they have.