INSUBCONTINENT EXCLUSIVE:
The income share agreement (ISA), a financing model where students pay for an education program with a certain percent of their income for
several years after graduating, has been one of 2019 new buzzwords among VCs and entrepreneurs in Silicon Valley
While still a nascent market that faces regulatory uncertainty in the US and abroad, ISAs are a mainstay of learn-to-code bootcamps and are
being piloted at dozens of universities
This financing model is receiving attention because it directly aligns education programs with students& career outcomes — something that
could transform parts of higher education.
ISAs will transform the labor market even further though
In the next few years, use of ISAs will likely go beyond formal education programs to create a new category of career accelerators that are
more like scaled talent agencies for businesspeople
Across industries and seniority levels, we will see ambitious professionals choose to pay a small percentage of their future income to
partner companies that promise to accelerate their career rise.
Those companies will provide ongoing hard and soft skills trainings, job
scouting, guidance on picking the career track and geographic location with the most promise, prep for compensation negotiations, personal
branding guidance, and other tactical support like key people to meet and which conferences or private gatherings are most important to
target.
This movement will start with graduates of ISA-financed education programs but will quickly expand to other professionals
As career accelerators prove effective at enhancing participants& career prospects, peers of those participants will fear that they are less
competitive in the job market without having the advantage of a career accelerator helping them as well.
Outsourcing career guidance
The
average annual operating budget for career services departments across US colleges is merely $90,000
For universities, there almost no support for job placement upon graduation despite the claims of universities in their marketing materials
And there definitely no support provided during the years after graduation.
The promise of ISAs is to incentivize higher education programs
to design their curriculum with their students& future financial success in mind
Most of the ISA initiatives active right now are either used as a replacement for private student loans at accredited universities or as the
financing solution for non-accredited vocational programs (a.k.a
&bootcamps&) that don&t qualify for federal student aid
Their focus remains on curriculum though — it a wholly different activity to focus on guiding graduates in their careers for years
