The $260,000 Question: The Future of Higher Education Funding as it Relates to the Emergence of ISAs and the Growing Burden of Student Debt

The $260,000 Question
The Future of Higher Education Funding as it
Relates to the Emergence of ISAs and the Growing
Burden of Student Debt
Joseph Lanzel, Andrew Noble, Joseph Grady, Ian Weber, Michael Yu
4/25/2016

The $260,000 Question April 25, 2016
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CONTENTS
Abstract...........................................................................................................................................................................................3
Central Research Question .....................................................................................................................................................3
Executive summary ...................................................................................................................................................................4
Background and Business Relevance.............................................................................................................4
Trend Analysis and Projections........................................................................................................................4
Implications and Recommendations..............................................................................................................5
Problem Description.................................................................................................................................................................5
Relevant History, & Background..........................................................................................................................................6
Important Stakeholders in Income Sharing Marketplace......................................................................................10
College Students ...................................................................................................................................................10
Potential Investors in Income Sharing Agreements .............................................................................10
Private Student Loan Originators .................................................................................................................11
Colleges & Universities......................................................................................................................................11
Government............................................................................................................................................................12
Potential Drivers & Constraints for Income Sharing Success...............................................................................12
Return on Investment for Higher Education Continues Demand Expansion............................12
Rising Cost of Attendance Will Drive Need for More Funding.........................................................13
Availability of Debt Financing Could Constrain New Models...........................................................13
Financial Markets May be Interested in a New Alternative Investment Vehicle .....................14
Congress Realizes Need for Clarity around ISA Regulation ..............................................................14
Future Federal Loan Funding Impacts Tuition and Affordability...................................................14
College Enrollment will affect Demand......................................................................................................15
Forecasting Income Sharing Agreements .....................................................................................................................15
The Fundamentals: Projecting the Key ISA Indicators............................................................................................15
College Tuition and Net Price of Attendance Continue to Rise...........................................................2
Student Debt Levels on Track to Double by 2030 .................................................................................16
Private Student Debt Becomes Riskier and Will Shrink......................................................................17
Government Loan Availability Continues to Grow................................................................................19
Government Regulation for ISAs is Sparse ...............................................................................................19
Rise of Alternative Solutions...........................................................................................................................20
Forecasting a Baseline Projection....................................................................................................................................20
Income Sharing Agreement Indicators.......................................................................................................20

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Ten Year Baseline Forecast for Income Sharing Agreements ..........................................................22
Critical Uncertainties and Their Implications.............................................................................................................23
Future Political Environment is Unclear...................................................................................................23
Risk and Return Profiles are Highly Variable and Difficult to Quantify.......................................23
The Major Five Future Scenarios of Income Sharing Agreements.....................................................................24
The College Graduate (Expected) .................................................................................................................24
The Summa cum Laude Student (Preferred)...........................................................................................25
The Applicant Denied Admission..................................................................................................................26
The Expelled Student..........................................................................................................................................26
The Student on Academic Probation...........................................................................................................27
Potential Scenario Implications.........................................................................................................................................28
Academic implications.......................................................................................................................................28
Legal Implications .................................................................................................................................................29
Business and financial market implications..................................................................................................31
Conclusion...................................................................................................................................................................................33
Works Cited................................................................................................................................................................................34

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ABSTRACT
This document discusses the past, present, and projected future of Income Sharing Agreements (ISA), a
potential alternative to traditional higher education funding. The discussion considers important milestones in
higher education funding, major issues presently faced, and attempts to consider various scenarios through
which those issues could be resolved. Finally, the implications of each of those scenarios will be drawn out in
order to emphasize the financing landscape ten years from today.
CENTRAL RESEARCH QUESTION
What is the future of higher education as it relates to the
emergence of Income Sharing Agreements and the growing
burden of student debt?

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EXECUTIVE SUMMARY
BACKGROUND AND BUSINESS RELEVANCE
Until recently, most people had never heard of
the term “Income Sharing Agreement.” However,
the idea behind this alternative form of college
funding has origins dating back to the 1950s and
Milton Friedman. An Income Sharing Agreement
(ISA) is a financial contract between an investor
and a “borrower” in which the investor provides
capital up front in exchange for a percentage of the
recipient’s income for a set number of years or in
perpetuity. Since Friedman’s expression of this
concept in his widely read essay on government’s
role in education, various institutions and startup
businesses have experimented with the ISA on a
small scale, with limited success. With regulatory
boundaries on the verge of elimination, these
contracts may finally be ready to make a significant
impact in the student debt environment. The
cumulative level of debt is currently at $1.3 trillion,
and there may soon be the need for an alternative
financing option to release some of the built up
pressure in the student loan market. The business
relevance of the ISA is profound, with major
implications for startups, venture capitalists, and
wealthy individuals that may be interested in this
potentially profitable and socially responsible
investment. Needless to say, the current loan
providers, as well as universities, would also be
impacted by any shift from the current state.
Moving forward, this report assesses the current
environment and analyzes drivers and constraints of
change, projecting them out based on recent trends.
TREND ANALYSIS AND PROJECTIONS
Several key trends were taken into
consideration in order to project the future of the
Income Sharing Agreement. The price of college
tuition has continued to rise over the past several
decades, increasing demand for student financing
alternatives. These high price levels can be
attributed to increased university spending on top-
notch facilities and faculties to remain competitive
and enhance the overall student experience. Record
high student debt levels have accompanied this
increasing cost of college attendance. In fact,
student debt levels in the U.S. have tripled over the
past decade, and are projected to double again by
2030. The cumulative level of student debt has
taken over as the second largest form of loans in the
U.S. by volume behind mortgages. These student
loans are predominantly funded by the government,
but at current growth rates federal funding of these
loans is quickly becoming unsustainable. Plus,
private student debt has become an increasingly
risky option in the wake of the Great Recession and
the resulting liquidity crisis. This funding void and
tuition increases may provide an opportunity for
ISA providers. However, ISA growth will be
constrained in the short term by regulations, legal
boundaries, and the rise of other alternative
solutions. These constraints, combined with major
political and ethical uncertainties surrounding the
topic, have stifled the growth of the Income Sharing
Agreement. The summative baseline projection
FIGURE 1: ISA PAYMENT STRUCTURE

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focused on these drivers and constraints foresees
ISAs as a viable financing alternative, though small
and relatively insignificant over a ten year time
horizon. In an upside scenario, Income Sharing
Agreements will clear all regulatory hurdles and
take over as a major college funding alternative. On
the other end of the spectrum, legislation promoting
ISAs gets rejected by congress, and ISAs become a
mere discussion topic rather than a financing reality.
IMPLICATIONS AND RECOMMENDATIONS
There are several relevant implications to
consider that stem from each of the forecasted
scenarios. These insights can be broken down into
three main categories: academic, legal and business.
The higher education system would be significantly
impacted by a shift toward ISAs. This would drive
universities to more accurately reflect their return
on investment in their cost of attendance, as
students flock to programs where they could get the
best deal for their money. Furthermore, academic
institutions and their endowments may want to get
involved with Income Sharing Agreements, which
could serve as a way to invest in the futures of their
own students.
Regarding legal implications, if the ISA were
to get shut down by lawmakers, then the
government would be heavily involved in the
regulatory process along with courts and law firms.
On the other hand, in the expected and preferred
scenarios, law firms dedicated to protecting students
and dealing with ISA contracts would become
prevalent.
Concerning business and financial
implications, an expanded ISA system would attract
startups, venture capitalists, and wealthy
individuals, potentially becoming a lucrative
market. The securitization of the ISA market could
also develop as a secondary implication, and an
interesting financial concept to consider. Finally,
this report comes to the conclusion that the ideal,
preferred scenario includes ISAs, although in small
amounts. Realistically, the ISA will not comprise
more than 7-10% of total college funding. That said,
an optimal bundle of government debt, private
loans, and ISAs will help alleviate stress from the
growing level of cumulative student debt. This
report predicts that regulatory boundaries will be
put in place and that the ISA, in the right amount,
will allow students to enter the workforce with more
promising financial situations.
PROBLEM DESCRIPTION
“How am I possibly going to fund my college
education?” Millions of high school seniors face
this question each year as they look to finance their
schooling. The common sources of funding include
family, financial aid, scholarships, and loans.
However, some students like Joe Lanzel at the
University of Notre Dame are taking a unique
approach to paying the bill. When faced with the
$260,000 challenge of funding a Notre Dame
degree, Joe’s father devised a new plan. Instead of
strapping his son with debt for much of his early
life, his father offered him equity financing. Using
this concept, Mr. Lanzel would front the bill and in
return Joe would pay his father five percent of all
future income. Little did he know, Joe’s creative
solution is a real financial instrument gaining
commercial relevance under the name “Income
Sharing Agreement.” While Lanzel’s agreement is
fairly simple with relatively extreme terms, the
concept has the potential to disrupt the college
funding market. This could be especially pertinent
in the years to come as the cumulative student debt

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level in the United States continues to rise alongside
increasing default rates. Looking forward, it will be
important to consider the future of higher education
funding as it relates to the emergence of Income
Sharing Agreements and the growing burden of
student debt.
RELEVANT HISTORY, & BACKGROUND
Below is a discussion about the background information necessary to understand this topic. This will include
the introduction of key terminology related to Income Sharing Agreements, notable instances where the topic
has appeared over the past century, and relevant expert opinions and analysis on the subject matter. We will
conclude with an outline of uncertainties and controversies as well as a description of the current state of the
system.
An Income Sharing Agreement is an
investment vehicle through which
students can obtain college funding
in exchange for a small portion of
their future earnings. This kind of
contract varies in terms of structure,
but as an example, a student could
receive $15,000 in exchange for 5%
of their income for 15 years. An
ISA thus transfers the financial risk
from the student to the investor by
allowing students to pay back their
liabilities at reasonable rates
relative to their income levels. This
structure allows graduates to
transfer the downside risk of
overbearing payments to investors
during financial struggles, and
shares the upside potential with
investors during financial
successes. As an alternative to
student loans, the ISA has become
an innovative financing vehicle that
continues to gain relevance in 2016.
Although the discussion
surrounding equity financing in higher education is
a trending topic in 2016, the concept dates back to
the mid-20th century. The idea behind the Income
Sharing Agreement was first introduced by Milton
Friedman in 1955. Friedman stated that,
“The [equity] counterpart for education
would be to ‘buy’ a share in an
individual's earning prospects; to
advance him the funds needed to
finance his training on condition that he
agree to pay the lender a specified
fraction of his future earnings”
(Friedman, 27). Friedman emphasized
the benefits of equity investments in
students for lenders, who would receive
more than their initial investments from
successful individuals to compensate for
potential losses in other students. This
investment vehicle would allow talented
students to get academic training that
would have otherwise been impossible
due to low household income or a poor
credit rating.
Friedman’s essay spurred
increased awareness and
experimentation on the subject in the
following decades. In a 1970 effort,
students at Yale University
experimented with equity financing through the
Tuition Postponement Option (TPO) program. The
TPO program, introduced by Nobel-prize winning
“The [equity] counterpart
for education would be to
‘buy’ a share in an
individual's earning
prospects; to advance him
the funds needed to finance
his training on condition
that he agree to pay the
lender a specified fraction
of his future earnings”
Milton Friedman,
Nobel Laureate

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economist James Turbin, had approximately 3,300
Yale undergraduate participants. These participants
were required to pay four percent of their future
income for every $1,000 they borrowed from the
University. The program was enacted in response to
an inactive federal government and stagnant
educational institutions in the midst of rising
college attendance costs. Despite its innovative
approach, the experiment had major structural flaws
and ultimately failed when former students were
forced to pay larger slices of their earnings than
anticipated. According to Yale News, “TPO’s
major problem was that its participants were set up
in groups called “cohorts,” meaning that all
members would keep paying until the entire group’s
debt was paid off” (Ladine, 7). This experiment
ultimately became a major stepping stone for the
evolution of the Income Sharing Agreement as we
know it today.
Further experimentation and research
developments in the 1980s and 1990s prompted the
development of companies that specialized in these
types of “human capital contracts” (HCCs). The
first major company to put this idea into practice
was My Rich Uncle (MRU). MRU was a company
that found temporary ISA success, and ultimately
made it onto Fast Company’s 2006 Fast 50 list (My
Rich Uncle 8-K). The difference between MRU and
its competitors was that it spoke out against
predatory industry practices. They sought to
improve borrowing conditions for students by
incorporating forms of human capital investment in
their loans. MRU used an algorithm that factored
student academic ability and potential earning
power into the loan terms, instead of focusing on
more common industry determinants like credit
scores. MRU offered loans that closely resembled
ISAs, in which they would loan money up front and
“over a 10 to 15 year period [they would expect to
receive] between 1 to 4 percent of the [graduate’s]
gross annual salary” (Windmeyer, 4). The MRU
model grew in popularity in its early years,
catapulting the company toward the top of the
private student lending market. Unfortunately,
much of MRU’s success relied heavily on financial
backing from Lehman Brothers and Merrill Lynch,
so when these banks went bankrupt in 2008, MRU
followed suit. That said, MRU was an early
inspiration to others who were equally dissatisfied
with student lending practices. Their campaign to
investigate malpractice within the student loan
industry was successful in bringing about tangible
and positive change. MRU was able to expose some
of these practices and create greater transparency,
and shortly after its bankruptcy, a few small, private
businesses picked up where MRU left off.
More recently, startups like 13th Avenue
Funding and Lumni have implemented the true
equity based ISA. There had previously been years
of discussion and experimentation with the concept
without any sustained success to set a positive
precedent. These two companies stand at the
forefront of a recent surge of startups seeking to
effectively implement the ISA and allow students to
attend college debt-free. The 13th Avenue Funding
mission, in their words, is to “use our locally
controlled, equity based technology to send
members of your community through college” (“A
New Way”). Under this system, a student would
only pay when they are making money, and thus
there is a transfer of financial risk away from the
student. Both these startups are pioneers in the field
and have been very well received while achieving
tremendous success, given their small sample sizes.
Lumni has a slightly larger student-base, and thus
far has financed “7,000 students to date, nearly all
from low or very low-income backgrounds where
funding recipients are the first family members to
attend college” (Lumni). The entrepreneurs behind
these organizations are not only intelligent, but also

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driven by a desire to enact socially responsible
change in the realm of financing higher education.
Their actions have major implications in the
business world, and have received attention
amongst political figures and lawmakers. Though
these startups, among others, have effectively
implemented the ISA on a small scale, the concept
has yet to gain significant traction with larger
corporations.
A major expert on alternative solutions to
higher education financing and the
ISA in particular is the American
Enterprise Institute (AEI), a think
tank based in Washington D.C.
dedicated to researching
governmental, political, and
economic issues related to social
welfare. The AEI’s 2014 report
sheds light on the specific legal
hurdles that have prevented the ISA
from getting to the point of
widespread implementation. These
hurdles include the absence of legal
clarity provided by Congress on the
topic, the lack of interaction between
federal student loans and alternative
financing tools, and the
unavailability of data on the labor
market outcomes of college students
(Palacios, DeSorrento & Kelly).
In addition, the AEI report
provides a list of feasible models for
the application of the ISA in the United States,
broken down into four categories: profit-seeking
funds, altruistic funds, “Pay It Forward” options,
and educational programs. The profit-seeking fund
“would be established on purely economic grounds”
(Palacios et. al.), similar to the Lumni model.
Similarly, the altruistic model allows investors to
realize a return, but narrows the focus to a particular
type of student or field of study. The “Pay It
Forward” option, which has been proposed by the
state of Oregon, allows students to pay back a
portion of their income to a state fund rather than an
investor. The educational program application
would allow individual institutions to implement the
ISA for prospective students as an alternate form of
financial aid. The AEI stresses the viability of these
applications of the ISA and argues that,
“Policymakers should ... facilitate the growth of
ISAs and state-based [Pay it Forward]
plans as new innovative financing
options for students” (Palacios et. al.,
8). This 2014 AEI report laid the
groundwork for institutions
considering the implementation of the
ISA and ultimately provided the
framework for Senator Marco Rubio to
develop his 2014 “Investing in Student
Success Act” (Griswold).
The next era for Income Sharing
Agreements began with the proposal of
the Investing in Student Success Act of
2014. The driving political figure and
outspoken supporter of this legislation
has been Florida Senator Marco Rubio.
Rubio has consistently expressed his
interest in getting involved with higher
education financing. He sees two
problems, the first of which is the
current state of affairs with regards to
the crippling student debt in the U.S. The second is
a lack of legal boundaries and definitions
concerning ISAs. Thus, in 2014, Rubio proposed
this bill with the goal of creating a “legal
framework that would provide investors with clarity
regarding tax treatment, consumer disclosures, and
other relevant aspects of these contracts” (Rubio, 5).
He went on the explain that “by clarifying the
“By clarifying the
lawfulness of Income
Sharing Agreements, this
bill incentivizes the free
enterprise system and
allows people to access the
skills needed to take
advantage of the
opportunities created by the
free market”
Marco Rubio,
US Senator

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lawfulness of Income Sharing Agreements, this bill
incentivizes the free enterprise system and allows
people to access the skills needed to take advantage
of the opportunities created by the free market”
(Rubio, 7). With public support from key political
figures like Rubio, the ISA has continued to gain
significant momentum.
The most recent major event in the timeline
for this higher education financing trend came in
late November, 2015 in the form of
an announcement by Purdue
University. Purdue released a letter of
intent stating that the Purdue
Research Foundation would be
partnering with Vemo Education and
13th Avenue Funding in order to
further explore the opportunities
regarding ISAs. Purdue will look to
ISAs as a way to financially empower
its students. At first glance, this letter
of intent is little more than an
announcement of a dedicated research
partnership. However, this
announcement has potentially
groundbreaking implications. If the
Purdue Research Foundation were
able to set a precedent at scale, the
ISA could quickly disrupt university
financing across the country. For
now, though, Purdue and its partners
will conduct extensive research “to
evaluate the potential of ISAs as a
useful tool for Purdue students”
(Purdue University, 3).
Having laid out the history leading up to the
current state of the system, it is critical to define the
issues, uncertainties, and controversies that exist in
the debate surrounding this topic. One major
recurring issue with human capital investing is its
comparison to indentured servitude. Some groups
believe that by investing in a student’s education,
wealthy individuals essentially own a ‘piece’ of the
student. One outspoken critic on the subject, Kevin
Roose of New York Magazine, believes that ISAs
“give young people in the post-crash economy the
chance to indenture themselves to patrons in the
investor class” (Roose, 3). A common retort to a
critic like Roose would beg the question, how is an
ISA different from a student loan? In both cases
students must pay back the financier,
but for ISAs this process is less
burdensome and arguably more
ethical.
Another area of uncertainty is
how to handle the wide range of
earning power among various college
degrees, specific to majors. Some
individuals argue that only the “cream
of the crop” in terms of universities
and students will be able to receive
ISA financing. There are two
counterarguments to this. First, this
issue only arises when a college’s
return on investment (ROI) is low and
consequently should be unattractive
to students in the first place. Second,
this system would further incentivize
students to avoid those low ROI
schools and seek out high-quality,
low-cost programs. By making funds
more readily available for students
attending high return schools,
investors encourage students to
follow the money into better programs.
One more important issue for ISAs is the
uncertainty of these risky investment vehicles. All
investments have inherent risk, but for most
investments there are established ways of valuing
“This no-debt, low-risk
option is another way we
can help keep our land-
grant school within
financial reach of all
qualified students, and I’m
convinced that those who
support the education of a
student at Purdue are
making a very sound
investment.”
Mitch Daniels,
Purdue University President

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this risk. This is not the case for ISAs. Currently, it
is unclear whether investors could develop an
accurate and consistent model for predicting a
student’s risk adjusted future earnings. There is
substantial risk involved, and nobody can know
with certainty what a student’s life has in store. For
that reason, there will be significant difficulties
when looking to value a human life and future
earnings as an asset.
Given these major uncertainties, among
others, it is difficult to say whether or not the ISA
solution can alleviate the student debt issue at hand.
However, there is strong evidence indicating ISAs
will at least improve the system by aligning
incentives. After originating a loan, education
financing providers generally care very little about
student success outside of recouping their principal
and interest payments. With an ISA, the investor
has a vested interest in students’ success and ideally
would mentor them, because he or she and the
student share in both good and bad times. Even
given this clear improvement over the current
system, the uncertainty of ISAs remains a concern.
Despite developments in the discussion of the topic,
much more research stands to be done. There is an
encouraging energy surrounding the issue going
forward, with many stakeholders acknowledging the
change ahead.
IMPORTANT STAKEHOLDERS IN INCOME SHARING MARKETPLACE
In this section we will outline stakeholders in the system, analyzing their relevance and evaluating their
importance going forward.
COLLEGE STUDENTS
The most important stakeholders related to
ISAs are the students that would be involved in the
contracts. In the current environment, a majority of
students are restricted to three funding options:
federal loans, private loans, and out-of-pocket cash.
The expansion of ISAs as a new option for college
funding is dependent upon student demand. Without
consumer interest, ISAs and their supporters have
little hope of further growth and development.
Interest is high, as potential college students hope to
find an alternative to large and crippling student
debt and avoid joining current graduates, of which
approximately 43 million owe an average of
$27,000 to the federal government alone (Daniels).
College students could be further broken down
demographically. This could be done in a number of
different ways. Namely, students could be
categorized as stakeholders by current
socioeconomic status, minority groups, earning
potential by major, and credit rating. Looking at
college students by demographic breakdown will
allow for the ability to examine the system from
multiple perspectives.
POTENTIAL INVESTORS IN INCOME SHARING
AGREEMENTS

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A small number of venture-backed start-up
companies are currently in the market for ISAs.
These firms can function as for-profit or not-for-
profit entities. Regardless, their dependence on the
development and expansion of ISAs is deeply
embedded within their company’s vision. Whether
motivated by philanthropy or a desire for monetary
returns, early adopters of ISAs have a great
potential to drive change. Currently, these firms and
their investors are dependent upon regulatory
development and increased consumer interest.
Uncertainties in regulation and a lack of data are
limiting adoption, but this could change in the
immediate future. Regardless of the risk and
uncertainties, venture firms and early adopters are
always intrigued by significant problems like
student debt. Upstart, 13th Avenue Funding and
Lumni have entered this market to become the first
movers in the rapidly growing and potentially
groundbreaking income based financing space.
These stakeholders would be the primary instigators
in the event of a market shift toward the Income
SharingAagreement.
PRIVATE STUDENT LOAN ORIGINATORS
Private student loans are a diminishing
segment of the student funding environment, now
representing only seven percent of the market
(Dynarski). However, given that they do maintain
market share, they are stakeholders that will be
directly affected by the development of ISAs. As
federal alternatives become more consumer
friendly, with features like bankruptcy protection
and income based repayment, private loans are
taking a back seat to less risky alternatives. ISAs
could represent one of these alternatives.
COLLEGES & UNIVERSITIES
Schools have an interest in the way that
students fund tuition. The reality of the situation is
that schools compete for top talent, but not all
students can afford education at elite universities.
The universities themselves control the ultimate
cost of college and sit at the end of the food chain as
they determine the price of tuition, but have a finite
amount of funding to provide. Thus, universities
have to consider alternative means by which
students can cover the entirety of their tuition costs.
Colleges also have the option to create ISA
instruments for their own student body, as is being

~ 12 ~
developed by Purdue University and Oregon State
University (Daniels). As a group, they are very
influential in the macro-student loan environment,
and would play a role in the development of ISAs
moving forward due to the importance of their
approval or disapproval.
GOVERNMENT
The government is directly related to ISAs
through its power as a regulatory body. Implications
of regulatory activity will prove to be a significant
driver or constraint of future change and
development. Beyond its role as a regulator, the
government is a significant stakeholder through its
control over student debt. Luckily, specifics
regarding the federal loan portfolio are readily
available to the public. Federal loans currently
represent the majority of student debt, and large
issues related to default on this debt have caused
problems for the government (Wang & Boone).
Approximately 85% of outstanding student loans
are backed by the federal government, which has
driven programs and reforms to help support the
recent expansion of defaults on and devaluation of
student debt (Isom, Megan & White). Currently,
student debt is being devalued at a high rate, with
Moody’s and Fitch rating agencies recently placing
over $36 billion in student backed bonds on watch
for potential downgrade (Andriotis). This problem
is worsened by reforms and programs initiated
during the Obama presidency, such as the Pay As
You Earn initiative, which caps a debtor's monthly
payments at 10% of his or her yearly discretionary
income (Wang & Boone).
In addition, the government is interested in the
general welfare of citizens, which improves if more
adults have a college degree. The burden of student
debt has caused recent graduates to spend less
money on houses, automobiles, and retirement.
When saving for retirement takes a backseat to
interest payments for college graduates, a long-term
problem develops (Isom et. al.).
POTENTIAL DRIVERS & CONSTRAINTS FOR INCOME SHARING SUCCESS
This section highlights the major drivers and constraints that will have an impact on the trajectory of the
Income Sharing Agreement and its implementation going forward. The discussion below will help to more
clearly identify these moving parts within the ISA system.
RETURN ON INVESTMENT FOR HIGHER
EDUCATION CONTINUES DEMAND EXPANSION

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The lifetime
incremental value of
a college degree is
extremely difficult to
quantify given the
large differences
from one student to
the next. That being
said, for most
individuals there is a
significant benefit to
getting a college
degree over simply a
high school diploma.
In fact, in a recent
2015 report, Georgetown University estimated the
average difference in lifetime earnings between a
high school graduate and college graduate to be one
million dollars (Carnevale, Cheah & Hanson).
While this is one estimate among many, it is clear
that there are consistent positive returns for
investing in a college degree. In 2012, The
Hamilton Project calculated an internal rate of
return for the average bachelor’s degree and
reported a required rate of approximately 16%
which has held fairly constant for the past four
decades (Greenstone & Looney). With this clear
advantage of attending college the student demand
should continue to grow.
RISING COST OF ATTENDANCE WILL DRIVE
NEED FOR MORE FUNDING
It is no secret the sticker price for a college
education has consistently increased for decades.
According to the 2015-2016 College Board report
on trends in higher education, the average annual
growth rate over the past ten years was 2.4% and
3.4% for private and public four year non-profit
institutions respectively (Baum). This rate of annual
growth has outpaced the general inflation in the
United States based on
the Consumer Price
Index (Back to College).
Clearly, college prices
are soaring faster than
most other costs. More
importantly, though, the
total cost of attendance
is outpacing student
financial aid, increasing
average net cost for
families and making
higher education less
affordable as a whole
(Baum). As family
contribution – net cost of college – grows overtime,
students and their families will need more funding
to make up for financial shortcomings. It is
uncertain whether this increased funding would
come from debt or equity financing.
AVAILABILITY OF DEBT FINANCING COULD
CONSTRAIN NEW MODELS
Currently, funds from loans are easily
accessible for college students. The federal
government originates the vast majority of student
debt, and eligibility is based on need. Simply stated,
so long as an individual fits the proper profile, he or
she is able to receive a loan from the federal
government. While these low interest, low risk
federal loans are available and sufficient for funding
student tuition costs they will constrain the
development of an equity-based financing market.
However, there are indicators of this constraint
weakening due to federal loan limits. Unless per-
student caps are increased for government loans, the
rising cost of tuition will require students to seek
out more funds in the private sector (Kantrowitz). In
this case, availability, or lack thereof, of
incremental debt could become a driver for two

~ 14 ~
clear reasons. First, private loans are provided based
on credit ratings and cosigners, without which
interest rates become exorbitant, making them less
attractive sources of funds. Second, due to rising
default risks relative to return, the market for
securitized student debt is small and shrinking due
to decreasing demand for private student loans on
the secondary market (Dynarski). Should federal
loan programs continue to expand alongside tuition
the availability of ‘easy’ debt will act as a
constraining force. However, if federal loan
programs lag, a demand for funds should lead to
new, more reliable funding sources.
FINANCIAL MARKETS MAY BE INTERESTED IN A
NEW ALTERNATIVE INVESTMENT VEHICLE
Financial advisors and investors alike are
always looking to diversify portfolios. That is,
investors want to make higher consistent returns
with less risk and to do so they look for a variety of
investments to build out their portfolios. This
tendency has become especially clear in the past
decade as investment in alternative assets – assets
other than cash, stocks and bonds – has soared.
From 2005 to 2013, alternative investments have
experienced a 10.7% compound annual growth rate,
approximately twice that of traditional investments
(Baghai, Erzan & Kwek). McKinsey consultants
believe this increased interest is a structural shift
toward alternatives, driven in part by new product
vehicles creating unprecedented access for retail
investors (Baghai et. al.). Looking forward, ISAs
could fall in line with these new product vehicles
driving further alternative growth.
CONGRESS REALIZES NEED FOR CLARITY
AROUND ISA REGULATION
ISA start-up attempts thus far have proven that
student demand for ISAs exists. The major
constraint is on the supply side of ISAs. The ISA
startup Pave had over 10,000 applicants over three
years, but only funded 70 students due to a lack of
funds. Pave’s founder blamed this shortage on
insufficient regulation, stating that big investors
feared a lack of legal protections if a borrower
declared bankruptcy or refused to pay (Belkin). This
is due to the fact that there is no passed legislation
or judicial precedent on ISAs. However, the
environment could change in the near future with
the Investing in Student Success Act, which
clarifies important ISA questions like general
legality, treatment in bankruptcy, and payment
terms (United States). While this act is merely a
first step toward establishing a regulatory
environment for ISAs, it shows acknowledgment of
a legislative necessity and political support that,
given time, could lead to concrete regulations,
mitigating investors’ concerns.
FUTURE FEDERAL LOAN FUNDING IMPACTS
TUITION AND AFFORDABILITY
The federal government holds enormous
influence over student lending due to its significant
market share in student loan originations. In recent
years, approximately 90 percent of student loan
originations were through federal student aid
programs (Federal Reserve Bank). Consequently,
the majority of student debt is backed by the federal
government, which means the amount of debt
available to students is controlled through
government funding with tax revenues and Treasury
bond sales (Dynarski). Considering this, budgetary
expansion or contraction could be a potential
constraint or driver, respectively, due to the level of
available funding. Furthermore, though elected
officials generally want to expand the lenient and
forgiving federal loan programs for students, there
is increasing evidence that doing so contributes, in
part, to increasing tuition. In fact, in its 2015 report
the New York Federal Reserve concluded that there

~ 15 ~
is about a 65 percent pass through effect for
increased federal loans to college costs (Federal
Reserve Bank). Should politicians agree with the
report, it seems unlikely that there will be further
expansion to federal loan programs as they are
currently structured and therefore the probability of
further constraint due to increased loans would be
low.
COLLEGE ENROLLMENT WILL AFFECT DEMAND
The population and demographics of students
enrolled in universities will have significant
influence on the future of ISAs. Over the past five
years, college enrollment has declined in response
to an improving economy, a trend most accentuated
in lower income brackets (Brown). This is certainly
a constraining factor for ISAs. However,
government initiatives, recognizing the benefit of a
college degree, are looking to flip the trend around,
especially for low income students who stand to
benefit the most (“Increasing College”). Scott
Jenkins notes that many of tomorrow’s college
students will be the first in their families to pursue
higher education and will probably need financial
aid to pay for tuition, even though those dollars are
getting harder to come by (Williams). Should this
shift occur and more low-income students enroll in
universities, ISAs could become a critical funding
source to supplement traditional financial aid.
Looking forward Income Sharing Agreements require significant research and development before substantial
gains are achieved, but the current environment indicates change is on the horizon. Projecting the time frame
and impact of that change will be the next major step.
FORECASTING INCOME SHARING AGREEMENTS
Though the concept of an Income Sharing Agreement (ISA) dates back to the 1950s when Milton Friedman
mentioned the idea (Friedman), the potential for ISAs to become a feasible funding opportunity only arose in
the past decade as the student debt crisis became a primary issue in the United States. Now in 2016 the question
becomes how will ISAs change higher education funding in the decade to come? Will they gain admission to
college or will regulators deny access? Will they succeed after admission or will they simply get by or even get
expelled for breaking the rules? If they do succeed, will they struggle to graduate with a questionable 1.0 GPA
or dominate the market with Summa cum Laude honors? These are the questions this report looks to answer in
depth through projections and scenario analysis considering the many indicators and uncertainties of Income
Sharing Agreements.
THE FUNDAMENTALS: PROJECTING THE KEY ISA INDICATORS

~ 2 ~
Below is an in depth discussion of key drivers and constraints along with their individual indicators.
These analyses and forecasts will serve as the basis for the initial baseline forecast as well as future scenarios
later in the report.
COLLEGE TUITION AND NET PRICE OF
ATTENDANCE CONTINUE TO RISE
Over the past 20 years, the total cost of
college attendance for both private and public four
year institutions has steadily increased.
Furthermore, the average year-over-year growth in
college attendance costs has significantly outpaced
the U.S. inflation rate and the growth in median
household incomes over the same 20 year time
period (Baum). This trend classifies cost as a certain
driver, clearly seen through both the total cost of
attendance and net price of attendance indicators.
TOTAL TUITION, FEES, ROOM, AND BOARD
This rise in the price of tuition, fees, room,
and board (TFRB) can be attributed to several
factors, and will play a large role in determining the
demand for higher financing alternatives going
forward. On a high level, the reasoning behind these
rising tuition costs is that a college education
became extremely necessary in order to be
competitive in the job market. While students
compete for the best schools, universities also
compete for top talent and attempt to build strong
reputations. An article titled “Why College Costs
are so High and Rising” states that, “Among the
most selective schools, amenities have become an
important part of the race for the best and brightest”
(Schoen, par. 16). Universities now spend a lot
more than they used to on state of the art facilities,
top faculty, and general amenities that improve the
college experience. Essentially, the cost of
providing an education has risen, and colleges are
passing this cost onto students.
The other factor, though much smaller, is that
expensive schools are often seen as more elite,
whether or not this is actually true. As a result,
some schools might slyly attempt to portray the
appearance of being prestigious by pricing at cost
with elite schools like Ivy League universities, for
example. Taking these factors into account and also
realizing that colleges must keep up with inflation
shows why the cost of attendance has risen so
drastically and will likely continue to do so.
NET PRICE OF ATTENDANCE
The net price of attendance serves as an even
more specific and important indicator of the amount
$0
$10,000
$20,000
$30,000
$40,000
1995 1999 2003 2007 2011 2015 2019 2023
Net Priceof Tuition,Fees, Room, and Board
Private Nonprofit Four-Year Institutions
Public Four-Year Institutions (In-State)
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
1995 1999 2003 2007 2011 2015 2019 2023
Total Tuition, Fees, Room, and, Board
Private Nonprofit Four-Year Public Four-Year

~ 16 ~
that students are effectively paying to attend college
by subtracting total grant aid from TFRB costs. As
the net price of education rises, students will
increasingly seek financing alternatives like ISAs.
In 2014, the 4.12% year-over year growth rate of
the net price of attendance eclipsed the 3.64% year-
over-year growth rate of gross attendance costs at
private nonprofit universities, signaling a stagnant
grant environment in the midst of rising tuition
costs.
All signs point toward the net price tag on a
college education continuing to increase as it has
historically, which would create further
opportunities for financial instruments like the ISA
to dominate. However, major obstacles do exist.
The first obstacle, risk of an economic downturn, is
apparent in the above figure from 2007-2009.
During a recession, a greater number of individuals
will meet the criteria to qualify for federal loans and
grants. In fact, US News states that, “Federal grants,
such as Pell Grants and Academic Competitiveness
Grants, nearly doubled between 2008-09 and 2010-
11” (Bidwell). Future business cycles and college
tuition hikes will be key determinants of the cost of
college attendance moving forward.
STUDENT DEBT LEVELS ON TRACK TO DOUBLE
BY 2030
The level of student debt has grown for many
years and will most likely continue to grow at the
same pace in the future. Most research indicates that
we can expect a doubling of the student debt level
over the next decade or so. The growth of student
debt levels is certainly a driver of change with
regards to ISAs, because as the debt problem
worsens, the emergence of alternative forms of
higher education financing becomes more
important. Before analyzing the indicators, it is
important to first understand how bad the student
debt crisis is, how it got this way, and where it will
likely go from here. Currently, the cumulative level
of student debt is around $1.3 trillion. This number
has tripled in the last decade alone, and today nearly
three-fourths of bachelor’s degree graduates have
some form of student debt. This crisis is made
worse by the fact that, “One in four student loan
borrowers are either in delinquency or default on
their student loans, according to the Consumer
Financial Protection Bureau” (Berman, par. 6). So
how did things get so bad? The simple explanation
is that more and more people demanded college
education while college tuition outpaced financial
aid and income growth. That created a large funding
gap that millions of college students were required
to fill with loans. All the data point towards past
trends continuing for the foreseeable future. Further
examination can be done by analyzing the
indicators of this driver of change.
AGGREGATE STUDENT DEBT
Aggregate student debt is a total value of
current consumer student loan credit and is often the
value cited as the student debt level. The data used
for this indicator is “Student Loan Consumer Credit
Outstanding” from 2006 to 2015, published by the
Federal Reserve. Student debt data is rather accurate
and does not have any significant issues or
obstacles. The only potential concern is some
private debt data that may not be as reliable, but this
$0
$250
$500
$750
$1,000
$1,250
$1,500
$1,750
$2,000
$2,250
$2,500
2006 2010 2014 2018 2022
CumulativeBalanceStudent Debt (billions)

~ 17 ~
can be deemed insignificant when compared to the
bigger picture.
STUDENT DEBT PER BORROWER
This indicator is a better depiction of the debt
on a per-borrower basis. The data used for this
indicator is “Average Cumulative Debt Levels in
2014 Dollars: Bachelor’s Degree Recipients at
Four-Year Institutions” from 1999 to 2013
(depicted below). The data comes from the College
Board’s 2015 report on Trends in Financial Aid and
shows per borrower debt levels broken down by
institution type (private vs. public). Along with
other student debt data, this time series provides a
strong indication of increasing debt levels and
consequently the need for alternative funding
mechanisms. Much like the aggregate student debt
indicator, this indicator does not come with many
major issues or obstacles. The only minor concern
would be clearly defining the number of borrowers
considering that many students are not the active
borrower, and in their stead parents borrow funds.
PRIVATE STUDENT DEBT BECOMES RISKIER
AND WILL SHRINK
Private lenders have held a small share of the
student debt market for a long period of time now
and recently this share has shown signs of further
shrinkage. Previously banks had played a much
larger role in the student lending system as they
helped foot the bill for the Federal Family
Education Loan (FFEL) program until 2010.
However, due to a liquidity crisis, in large part due
to the Great Recession, banks could no longer
produce the capital needed to support the program
and the Department of Education stepped in
providing all student loans since then through the
Direct Loan program (Dynarski, para. 8). Much of
the incentive behind private loans up to 2010 was
the federal guarantee, ensuring repayment to the
banks and incentivizing securitization. Without that
guarantee there is heightened risk of default for
banks and consequently they have geared back
student loan origination. As a result the private
student debt market has shrunk as a portion of the
market, a trend which is expected to continue
(Dynarski, para. 14). With less private debt
available to students, other forms of capital should
arise to fill the resulting funding gap.
There are two key indicators to look at when
projecting the availability of private student debt
including yearly private debt issuance and loan
default rates.
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
1999 2002 2005 2008 2011 2014 2017 2020 2023
Average Cumulative Debt Levels in 2014
Dollars:
PrivateNonprofit Four-Year Universities
Per Borrower Per Bachelor's Degree Recipient
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
1999 2002 2005 2008 2011 2014 2017 2020 2023
Average Cumulative Debt Levels in 2014
Dollars:
Public Four-Year Universities
Per Borrower Per Bachelor's Degree Recipient

~ 18 ~
PRIVATE LOAN ISSUANCE
Private debt data often has many issues due to
the very nature that comes with it being private.
Banks do not necessarily report all their student
debt financials, and when they do the financials are
not always categorized in a uniform manner. As a
result, some data can be incorrect or inconsistent
depending on how it was collected and how it was
classified. The above data set shows yearly private
sector student debt issuance as reported by the
College Board in its annual Trends in Student Aid
report (most recent in 2015). While this data set is
no exception to the issues with private loan data, the
general trend shown is consistent with expert
opinion. As mentioned, private originations peaked
right before the great recession, but have since
declined, originally due to capital restraints, and
have remained low due to increased risk and lower
demand (increased risk means higher rates and less
consumer interest). It is difficult to draw any
concrete conclusions given the turbulence in the last
ten years, however it seems yearly private debt
issuance could be on the rise, though at a much
lesser pace than in the early 2000s. As the graph
extrapolation indicates, it is likely that the increase
will be at a level in line with the growth in the mid-
late 1990’s.
STUDENT LOAN DEFAULT RATES
Student loan default rates portray the potential
risk loan originators face when issuing loans to
students. Higher student loan delinquency as a
whole makes it less likely that banks will be able to
recoup their initial investment in the student.
Providing loans thus becomes less attractive to the
originator as well as secondary investors. This
private debt indicator is the most questionable given
that the default rates are based on federal student
loans instead of private sector loans due to the
unavailability of private sector default data.
Furthermore, this data seems extremely difficult to
project given the inconsistency over the past two
and a half decades. That being said the data from
the Department of Education (provides federal
student loans) shows a clear decline from the late
1980s through the early 2000s until the Great
Recession, since which the default rates have started
to rise. It seems that this trend should continue.
However, extreme extrapolation here seems highly
questionable due to the recent nature of the
recession to most contemporary data and the pre-
recession trend. Furthermore, surveys - though
infreque
Private student debt may be on the rise for the
time being, however, based on expert opinion and
comparison to approximately ten years ago, the
market seems to be less lucrative and shrinking
relative to other forms of funding. Whether private
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
1989 1993 1997 2001 2005 2009 2013 2017 2021
Two-Year Cohort DefaultRate (Gov't)
$0.0
$5,000.0
$10,000.0
$15,000.0
$20,000.0
1996 2000 2004 2008 2012 2016 2020 2024
PrivateDebt Issuance(Mil)
Private Debt Issuance
Private Debt Issuance Forecast

~ 19 ~
debt remains a key player will likely depend on how
it competes against federal debt options and the
repayment terms of other capital. With this in mind
it will be important to track the trends in student
debt of both the private and government variety.
GOVERNMENT LOAN AVAILABILITY CONTINUES
TO GROW
Traditionally federal student loans have been
the best source for students and their parents to seek
funding for higher education costs, because of lower
interest rates and more forgiving terms.
Consequently, those loans are generally the first
outlet families consider beyond their own funds
when paying the college bills. For that matter,
greater availability of government backed student
debt will result in declined student demand for
alternative means of funding like private loans and
ISAs. Ultimately there are two exceedingly
important stakeholders with interest in how much
federal debt is offered to college students: the
government paying the bills and colleges collecting
the bills. There is clear analysis showing that more
debt generally correlates with higher education
costs. In other words, there is a pass through of
federal funding dollars to universities with a
subsidy-like effect to the tune of about 65 cents per
dollar (Federal Reserve Bank). This research was
performed somewhat recently and its impact is
difficult to decipher. Nevertheless, monitoring the
effect of this finding is critical in understanding
how the government will treat lending policies and
how universities will react.
UNDERGRADUATE FEDERAL BORROWING PER
FULL TIME EQUIVALENT ENROLLMENT
The primary indicator for the availability of
government debt is the amount of student loans
issued by the government. Using the amount
borrowed per full time equivalent (the number of
full time students) gives the best understanding as it
eliminates fluctuations from variations in student
counts. That said, the general trend for overall debt
issuance is nearly identical and could be used as a
proxy for the per borrower indicator. The clear
upward trend of federal debt signifies the
availability of government funded debt as a
constraint. With more funds coming from the
government, students are less likely to turn to other
sources to pay for college. Like many other
indicators, government loan availability is greatly
impacted by the business cycle with recessions
resulting in higher use of federal loans. This has to
do with more families falling below the watermark
for many income-dependent loan programs. For this
reason, monitoring this indicator could be
problematic during extreme business cycles like the
one seen in the past decade.
GOVERNMENT REGULATION FOR ISAS IS
SPARSE
Regulation constrains the development of
ISAs as an alternative. Government entities cannot
create laws requiring ISAs, but the lack of positive
legislation and the potential for negative legislation
makes it easy for regulators to limit the
implementation of ISAs in the future. So far,
discussion at the national political level has been
limited with only one bill brought to congress and a
few hearings. Without significant advances by
regulators toward passing legislation, the lack of
regulation will remain a constraint because there is
$0.0
$1,000.0
$2,000.0
$3,000.0
$4,000.0
$5,000.0
$6,000.0
$7,000.0
$8,000.0
1991 1995 1999 2003 2007 2011 2015 2019 2023
Undergraduate Federal Borrowing per FTE

~ 20 ~
too much risk for investors if there is no legal
backing for ISAs.
An issue with this constraint is that there is no
numerical way to calculate progress, or the lack
thereof, toward legislation. The best indicator would
be tracking how often ISAs are brought up as an
alternative to financing for higher education
financing at the federal level of government. This
number may not be easily traceable, as it would
require searching through various meeting agendas
and proposals to find mentions. This is also a weak
indicator as discussion poorly correlates to action
and often fails to fully represent how much support
there is. Based on the aforementioned projections
regarding the worsening student debt levels,
lawmakers will likely begin to explore new
solutions, meaning that this indicator will likely
show growth. Whether this ultimately eliminates the
constraint is somewhat questionable.
RISE OF ALTERNATIVE SOLUTIONS
In response to the financial stress created by
student loans, public and private players have
created an Income Based Repayment loan which is
a cross between traditional loans and ISAs. Similar
to ISAs, these plans rely on the graduates’ annual
income when determining the monthly payment
rate. While the system still technically operates as
debt, the plan gives debtors a better repayment
option that allows them to repay their loans without
stressing their tight post-graduation financials.
The most direct indicator of this constraint is
the number of income based loans provided, as it
would show how much traction the alternative has
gained in the market. However, because this
program, like ISAs, is relatively new and much of
the market is made up of private startup companies,
no statistics have been collected so far. That said,
once debtors start seeking alternatives including
income based repayment plans, research should
arise with clear data supporting this indicator. From
there, an extrapolation of data can be made to
predict how many will elect to take on this debt
hybrid alternative.
FORECASTING A BASELINE PROJECTION
Below is the discussion of the baseline projection which considers the relationships between the aforementioned
drivers and constraints, forecasting Income Sharing Agreements by considering each indicator’s projected
future. The summative baseline projection foresees ISAs as a viable funding alternative, though small and
somewhat insignificant in the higher education market as a whole.
INCOME SHARING AGREEMENT INDICATORS
As a whole, indicators in the higher education
funding space point toward necessary innovation in
the next ten years. The greatest indicator of this
trend toward change is the rising cost of attendance
at colleges and universities. With the increase of
college bills consistently outpacing inflation,
families must reach beyond their income for
institutional support. This is made clear by student
debt indicators, which are also trending upward.
The demand for funds is positively correlated with
ISA success, but is dependent on the expansion or
contraction of private and government loan options.
If those options, especially government loans, grow
to fill the funding void, it is unlikely that students
will move toward ISAs to pay for school. That said,
it seems unlikely private loans, as they are currently
structured, will keep pace considering the

~ 22 ~
increasing unattractiveness mentioned earlier. The
bigger question is whether federal loan limits will
be raised, opening more funding to many students.
This is largely dependent on the political
environment and the derivative budgetary and
regulatory policies. This is one of the primary
uncertainties to be discussed later. No matter the
political environment though, it is unlikely federal
loans will keep pace with demand for funding and
consequently, alternative funding solutions will be
necessary.
In response to this need there are two main
alternatives, ISAs and private “Income Based
Repayment” (IBR) loans, the latter being a low-risk,
debt hybrid with a capped payment structure. Up to
this point the income based loans have had greater
traction in the market, and are projected to capture a
larger share of funding. This, combined with a lack
of regulation, make ISAs a riskier option than the
income based debt alternative. Therefore, ISAs have
been held back, and could remain stagnant for some
time without significant change.
Although there are certain measures that
would be clear and direct indicators of ISA
adoption, the limited time horizon and lack of
reliable data surrounding the subject make these
measures difficult to forecast or even to track
alongside the previously mentioned indicators. That
said, in the years to come, should ISAs begin
gaining more traction in the market, one could
monitor indicators such as the number of ISAs
provided, average ISA dollar value per student, or
average return per agreement. Given that this data is
currently private and unreliable, these indicators are
fairly useless. Even a search engine analysis of
“Income Sharing Agreements” and related
terminology renders an insignificant amount of
data. Consequently, the baseline projections use
trend extrapolations of driving and constraining
indicators to forecast the future of the niche income
based financing industry.
TEN YEAR BASELINE FORECAST FOR INCOME
SHARING AGREEMENTS
Through analysis of the above indicators and
their relationships, the baseline projection foresees a
funding environment in which Income Sharing
Agreements are present as a viable option in ten
years, with a very small but growing market share.
There is clear interest in alternative solutions to the
impending student debt crisis. However, lack of
regulation remains an immediate constraint with no
pending resolution in sight, hampering any
Projected College Funding Breakdown:
2016 (Left) vs. 2026 (Right)

~ 23 ~
widespread implementation of the concept.
Furthermore, the use of a debt alternative to ISAs is
more imminent and could become a bridge
technology for ISAs down the road, but well after
the ten year horizon of this report. Due to these
projections the baseline in the next ten years is that
ISAs will remain in the current state of small scale
experimental programs. They will continue gaining
awareness but fail to gain significant scale and
market share. This baseline projection is discussed
further in the expected “College Graduate” scenario
below.
CRITICAL UNCERTAINTIES AND THEIR IMPLICATIONS
Below is a discussion of the two key uncertainties influencing the future of Income Sharing Agreements:
Political Environment and the Plausibility of Accurate Valuations. Depending on the conclusions of these two
uncertainties moving forward, ISAs could become highly effective funding vehicles or fail altogether.
FUTURE POLITICAL ENVIRONMENT IS UNCLEAR
One major uncertainty that has the potential to
cause disruptive change in baseline projections is
the political landscape in the United States over the
next decade. This is the highest priority amongst all
other uncertainties because of how the political
landscape most often controls policy making ability
including implementation of new regulations.
Clearly defined regulation around ISAs is crucial in
order for them to become widely adopted, and the
political environment is a major uncertainty with
regards to the outlook for ISA regulation
specifically. The future of higher education
financing will be highly susceptible to government
policy decisions, particularly with the 2016 U.S.
presidential election around the corner.
The market for private financing solutions like
the Income Sharing Agreement is highly dependent
on federal regulations and the amount of
government aid provided for college students. Thus,
the dominant political parties in office will have
control over the trajectory of college education
funding given that the student debt crisis has been a
bipartisan issue in the past. This divide generally
positions Democratic politicians in favor of
federally funded debt programs friendly to students
and their families. Therefore, a Democratic
dominated Washington would likely focus on other
methods besides ISAs and potentially even legally
prevent ISAs. Meanwhile, the divide generally
positions Republican politicians in favor of private,
free market solutions like ISAs. In fact, the only
federal movement thus far including a testimony in
congress and a proposed bill were brought about by
Republican Party members. Thus, a Republican
dominated Washington would be much more
inviting to ISA regulation and would likely
encourage a free market alternative for higher
education funding.
RISK AND RETURN PROFILES ARE HIGHLY
VARIABLE AND DIFFICULT TO QUANTIFY
The uncertainty with second highest priority is
the ability to accurately value the risk and return
profiles in ISAs. Typically, investors do not like
placing their money in questionable ventures,
especially those with high risk and low return.
Assuming investors are risk averse, they will always
choose options with lower risk and higher return.
This is where the uncertainty plays the largest role.
Quantifying the risk and return for an ISA is
currently unchartered territory with a huge range of
potential outcomes given the nature of the
agreement. That is, each student is very different

~ 24 ~
with a number of factors influencing their future
income, making it extremely difficult to create a
uniform method of analysis and valuation. For
example, according to a Georgetown University
Report the median income for engineers was
$87,000 compared to just $42,000 for education
majors in 2015 (Carnevale, Cheah, and Hanson,
p.8). College major choice is just one of many
factors and there is a clear and substantial effect on
earning power. Adding in other factors including
university attended, grade point average, etc. the
picture becomes a little blurry. Although some
startups have had success in developing algorithms
and screening processes to reliably predict the
earning power of an individual, the ability to
evaluate these risk-return profiles will likely remain
a wild card for the near future. This uncertainty
becomes a pivotal concern. With accurate analysis
and valuation techniques ISAs carry the potential to
become a valuable asset for diversification, but
without a firm grasp of these techniques ISAs could
surpass investor risk aversion preferences and fall
into obsolescence.
THE FUTURE SCENARIOS OF INCOME SHARING AGREEMENTS
Below is a discussion of the five major potential scenarios for the future of Income Sharing Agreements. These
scenarios, created with the alternative futures method, are branded according to types of students in college.
The expected scenario or “College Graduate” projects ISAs taking on a niche role. The preferred scenario or
“Summa cum Laude Student” projects ISAs becoming part of a balanced offering with federal and private debt
options. The other three alternatives are “Applicant Denied Admission,” “Expelled Student” and “Student on
Academic Probation.” The first projects a nonstarter scenario in which ISAs are never regulated, the second
projects a scenario with early success followed by a large shutdown, and the third projects minimal action
followed by quiet abandonment.
THE COLLEGE GRADUATE (EXPECTED)
In the “College Graduate” scenario, ISAs
receive the necessary regulatory support and legally
speaking are a viable investment opportunity.
However, the concept never amasses into a
significant funding option. Investors consider ISAs,
but face too large a challenge attempting to quantify
risk and diversify assets making ISAs a difficult
venture with questionable returns. Consequently,
organizations and wealthy individuals are unwilling
to offer financing without generous return profiles.
On the other side of the discussion, students are
unwilling to accept funds under these aggressive
return profiles. Due to this stalemate, the ISA
marketplace never commercializes and remains
stagnant as a niche option, irrelevant in the larger
scheme of higher education funding.
ISAs will remain an option for some through
small, local, non-profit providers. These providers
will likely take one of three forms using a “pay-it-

~ 25 ~
forward” type model. The first group is wealthy
individuals looking for a philanthropic outlet. This
is essentially people who want to give back in their
community, but instead of providing a yearly
scholarship these individuals provide funds to a
number of students who, after graduation, would
pay a percentage of their income back into the fund
for future students to use. The second group is
alumni networks who, much like the individual
provider, would use a “pay-it-forward” model, but
instead would provide the funds for promising
students at their alma mater. Finally, universities
themselves might use this type of system as a part
of financial aid packages. In all cases the
agreements act similarly to ISAs, but with a non-
profit twist. The “investing party” simply recoups
its funds and potentially gains an additional sum to
account for administrative costs and inflation. As
ISAs remain insignificant, the main funding source
for college students will be federal and private
loans. Some of the loan funding will move toward
income based repayment methods as the main
innovative alternative.
THE SUMMA CUM LAUDE STUDENT
(PREFERRED)
With debt levels rising, the preferred scenario
must involve a successful emergence of alternative
forms of financing. It is unreasonable, however, to
project a scenario in which ISAs dominate the
market for higher education funding. Thus, in the
preferred “Summa cum Laude” scenario, there will
be an ideal mix of federal loans, income based
repayment, and ISAs. Federal loans would still
comprise a large portion of the market, but would
remain at healthy levels and be prevented from
growing out of proportion. The second option for
students would be income based repayment loans,
which would certainly help to alleviate some of the
stress of graduating with a lump-sum of burdening
debt. Finally, these two options would be
supplemented by the existence of Income Sharing
Agreements. Students would likely use these three
options in conjunction with each other, thereby
mixing and matching to ultimately find an optimal
funding plan.
Not every student would have the same
optimal funding plan. One student from a family
with no ability to pay for college could attend an
elite (and very expensive) university with mostly
financial aid, combined with an Income Sharing
Agreement to fill the rest of the gap. This intelligent
student that shows a lot of promise with regards to
earnings potential would be a primary candidate to
qualify for significant funding via an ISA.
However, another student coming from a wealthy
background might not get any financial aid and
choose to pay for college with a large amount of
federal loans. This student knows that his wealthy
family will probably be able to support him in
paying back loans, and he or she might choose to
supplement this with only a small ISA so as to take
some of the financial burden off of the parents.
Clearly, every student could qualify for or desire to
receive very different plans. Regardless, simply
having the choice is beneficial and allows for much

~ 26 ~
more flexibility. Furthermore, the income based and
income sharing plans would help to incentivize
students to attend stronger programs where they are
getting a good return on their investment. This
would certainly help to keep higher education costs
in check and is also part of the reason why this is
the preferred “Summa cum Laude” scenario. The
main driver that would disrupt the baseline forecast
here would be a rapid increase in ISA awareness
combined with successful trials and positive overall
public perception. If income based funding passed
through regulatory steps, was introduced and
implemented, and began to gain momentum,
eventually this ideal scenario would come to
fruition.
THE APPLICANT DENIED ADMISSION
In the “Applicant Denied Admission”
scenario, regulation never passes, preventing any
serious development of ISAs. The Investing in
Student Success Act currently in congress is turned
down and forgotten. Furthermore, later congresses
shut down any future attempts at reviving the bill or
regulating Income Sharing Agreements in other
ways. Leading parties in Washington push the
college funding discussion toward debt based
options, especially federal loans and income based
loans. As college tuition costs continue to outpace
inflation, tensions in both the financing market and
consumer market arise, with debt-ridden college
graduates struggling to make payments. The
government, focused on a federally based loan
solution increases program limits and loan-
forgiveness practices, pardoning greater and greater
amounts of student debt. The income based loan
repayment solutions gain a foothold in the market
after government encouragement. While
entrepreneurs and venture capitalists will remain
intrigued by the ISA concept, none will take key
steps toward forming a marketplace without passed
regulation and ISAs are merely a discussion and not
a reality. This discussion will quietly continue in
small circles and awareness never develops on a
greater scale leaving regulators and investors
uninterested in considering the matter further.
THE EXPELLED STUDENT
In the “Expelled Student” scenario, congress
passes significant regulation in support of Income
Sharing Agreements. As investors become more
confident in the platform, they bring capital into the
market for student investments. Eventually
awareness grows among students as startups
gradually flood the market with more funds and

~ 27 ~
marketing campaigns. Students and their families
positively receive the concept of equity based
financing for higher education. The system builds
out scale to the point where it seemingly has staying
power with substantial market share, alongside
federal and income based private loans. However,
this success is short lived. The concept was
successful at a small scale, but on the expanded
platform, the glaring flaws of the ISA system
become apparent. The most likely and problematic
issues include coercion by investors and fraud by
students. In the first case, holes in the system allow
investors to coerce students they have funded into
specific majors or professions causing extreme
concern for families, universities, and regulators.
Many lawmakers grow concerned that ISA are more
of a form of indentured servitude than a method of
education funding. Consequently, lawmakers and
courts shut down the ISA marketplace, eliminating
the option. In the second case, inherent challenges
in the application process become red flags as
applicants exploit weak information validation
systems. Essentially, it is too difficult to monitor
and fact check applications and maintain feasibility
in the system. Therefore, the frequency of
fraudulent applications rises to an undesirable level
and many investors leave the marketplace due to
increased risk and exorbitant legal fees. In either
case, after showing promise, Income Sharing
Agreements quickly exit the market due to realized
major flaws. As a result, students return to the
traditional system with federal and private loans
while income based repayment plans emerge as the
dominant alternative innovation in place of ISAs.
THE STUDENT ON ACADEMIC PROBATION
In the “Student on Academic Probation”
scenario, ISAs successfully gain regulatory
boundaries and begin appearing in small amounts.
Nothing dramatic changes in the near-term, other
than the appearance of a few more startups
dedicated to providing income based higher
education funding. The main force of change in this
scenario is a major disruption simply caused by a
lack of interest in ISAs. Although the contracts hit
the market and have legislation backing them, they
end up fizzling out of relevance. There are many
reasons why this could happen. First, ISAs could
disappear due to a lack of success in trials. Envision
a scenario in which many students begin
experimenting with this alternative as a way to fund
their college education, and afterwards it proves not
to be a satisfactory replacement for debt. Students
could be unhappy with the structure of the
agreements or with the people providing them. It
could also be the case that ISAs pass through
regulatory steps but never truly gain the awareness
necessary to get off the ground. If students were not
demanding income based funding or they simply
were unaware that it even existed, the startups
dedicated to this cause would be troubled by lack of
business. This would not be a favorable market to
enter as an investor or as a student, and slowly the
entire idea would fade out of existence. Other forms
of funding would fill the small portion of the market
that the ISA currently holds. The ISA would not be
completely dead, but it would be on the ropes and

~ 28 ~
need a major comeback to survive. This comeback
is a definite possibility, but it would occur outside
the next ten or even twenty years. This time frame
would not be appropriate for the introduction of the
ISA, but perhaps somewhere down the line some
other major disruption could call for the rapid
emergence of alternative financing.
POTENTIAL SCENARIO IMPLICATIONS
ACADEMIC IMPLICATIONS
When considering the higher education
environment, both the universities themselves and
the students are important stakeholders. The
progression of ISAs will have a large effect on these
groups as they are both directly involved in higher
education funding.
STUDENTS
In the scenarios that feature ISA expansion,
students in the market for college financing will
gain greater optionality. Equity-based alternatives
allow students to avoid the direct burden of debt
and the negative repercussions of that burden so
early in life. The incentive structure built into ISAs
gives both the student and investor the same goal—
student success. Financial support through ISAs
would remove some of the constraints inherent in
having few alternatives to traditional loans. One
potential negative to this structure could be when
the incentive alignment between investors and
students is removed. Students control their own
career paths, and when the focus turns away from
income and towards other goals, investors may
become displeased. This could lead to predatory
practices from investors, creating an abuse of power
and possible extortion. This topic will be further
discussed in the “Legal” section below.
The Summa Cum Laude and College
Graduate scenarios create an environment in which
students are faced with making decisions about their
earnings potential even before college. Not only
will this put a spotlight on the return on investment
(ROI) potential of specific schools, but it will also
change the way students view their major selection.
Students may choose to study areas that offer higher
average earnings, such as aerospace engineering, as
opposed to subjects that usually feature lower
salaries out of school, like elementary education
(American Community). This could have an impact
on colleges’ distribution of resources, putting bias
towards STEM degrees and away from liberal arts.
According to a study done by the New York Federal
Reserve, the “return to college varies considerably
across majors” (Abel & Deitz, 7). This could be
interpreted as both a positive and negative
implication. Forcing students to consider what
degrees can support repayment is a positive. When
students fail to pursue
their true interests,
however, there are
negative consequences.

~ 29 ~
HIGHER EDUCATION INSTITUTIONS
Schools and universities will be forced to
adapt depending upon which scenario plays out.
When income based financing develops, as in the
Summa Cum Laude and College Graduate
scenarios, a greater focus will be placed on a
school’s average ROI. As stated in a recent White
House press release, “students struggle to find clear,
reliable data on critical questions of college
affordability and value” (Office of the Press
Secretary). If income based financing gains market
share, pressure will be placed on schools to
publicize the job placement and wage potential their
students have attained in the past. A school’s
intangible offerings will become less important as
the concrete value of a degree rises. Less expensive
schools with solid histories of developing their
students and finding them high paying jobs will be
rewarded. Tuition for these schools could
conceivably rise. Other institutions, such as private
and out-of-state public schools, will become less
appealing, as their large price tags drag down ROI
potential. ISAs or income based loans will force
secondary education to become more competitive
from the provider’s standpoint, and value will
become central. In the other three scenarios,
Academic Probation, Expulsion, and Denied
Admission, the environment would stay very
similar to where it is at right now. The Academic
Probation scenario may raise awareness of the value
of ROI analysis due to the minor role played by
ISAs and more significant role played by income
based repayment loans.
Certain scenarios will force schools to change
their tuition strategies. The Summa Cum Laude and
College Graduate scenarios might trigger schools to
institute income sharing models into their payment
structures. Both Yale and Oregon have featured an
income sharing option in the past, and Purdue is
committed to implementing a program within the
next year. Their plan would feature an investment
pool of funds that students would draw from during
attendance, then pay back into the pool as their
careers progress (Sequin). Given the large
endowments many schools are building, an ISA
option could be seen as an efficient use of funds. In
the best case, they could create a significant cycle of
cash inflow and outflow. These schools would need
to acquire the resources and hire the people
necessary to create ISA programs in-house. Major
potential exists, however, and school run programs
could revolutionize the market.
The Academic Probation, Expulsion and
Denied Admission scenarios feature rising tuition
costs and continue to offer federal funding as the
main solution. Relying so heavily on federal
funding will only contribute to continual tuition
increases. According to the New York Federal
Reserve, a one dollar increase in the federal
subsidized student loan maximum results in a 58
cent increase on the sticker price of education
(Federal Reserve Bank of New York, 21). This
cycle would continue to stress the government and
entire system.
LEGAL IMPLICATIONS
There are a few important parties to be
considered for legal implications including law
firms, government oversight agencies and the court
system. Each of these three will be greatly affected

~ 30 ~
should a new funding
alternative become
popular.
LAW FIRMS
The private side is
mainly focused on law
firms and legal consultants
at businesses. With a new
financial vehicle such as
income based repayment
loans and Income Sharing
Agreements there will be a
need for specialists who can write and interpret the
new contracts between investors and students. Some
lawyers will work on the business side to ensure
contracts are legal and binding so that investors will
be able to collect payments down the road. Other
lawyers will represent students and their families
guiding them through documentation and then
protecting them if necessary when contract terms
are violated.
These new roles will develop new specialties
in law and depending on the scale, entire firms
could arise focusing on higher education funding.
This will occur in the alternatives heavy scenarios
including Summa Cum Laude, College Graduate
and Expulsion. For the Summa Cum Laude there is
potential for ISA law to become a significant arm of
contract law. In the College Graduate scenario it is
most likely that a specialist here or there might
arise, but they would not have an overwhelming
presence. Finally in the Expulsion scenario ISA law
will surge with all the legal commotion surrounding
the demise, but this will be short lived. Finally, in
the other two scenarios, the legal side will be fairly
light so implications for lawyers will be somewhat
insignificant.
COURTS
The judicial system will have increased
workflow should an ISA marketplace arise. That is
because many of the new contracts, and related
issues, could be disputed in the court systems. There
are endless complications that could arise from
these agreements. For example, graduates could
stop paying back investors. They could hide the true
value of their income, flee the country, or straight
up ignore their obligation entirely. There is also the
potential for investors to use unethical practices by
extorting students and their families or creating
illegal and unfair contracts. These circumstances
will lead to legal action.
Consequently, courts will have to step in and
rule over these cases. New precedents will form
overtime as judges hear more cases. There is even
potential for an expanded court system should ISAs
become a large enough investment market. This
would occur in the Summa Cum Laude scenario or
Expulsion scenario. In these cases there would be
significant expansion of the court systems and
precedent. In each of the other scenarios there
would be limited impact due to there being an
insignificant number of cases flowing through the
system.
GOVERNMENT OVERSIGHT AGENCIES

~ 31 ~
Government regulators and governmental
agencies will see an increased role in education
funding oversight with new education financing
vehicles arising. That is because there needs to be a
form of governmental intermediary between
students and investors. Consider other financial
markets and how each has some form of oversight.
The stock exchanges have the SEC ensuring a fair
relationship between businesses and investors. A
similar agency would be needed for ISAs ensuring
fairness between investors and students. This is
necessary to prevent illicit behavior such as missed
payments by students or extortion by investors. That
is, should incentives of students and investors
conflict, it is likely investors could take illegal or
unethical action to recoup their funds. This is
obviously problematic to the marketplace and so a
watchdog agency would monitor such behavior.
It is truly difficult to say how this
governmental third party would manifest itself, but
it seems certain it would arise in each scenarios
with significant ISA impact. These would include
the Summa Cum Laude, College Graduate, and
Expulsion scenarios. In the Summa Cum Laude
scenario there would likely arise an entirely new
agency or committee for ISAs much like the SEC
for the stock market. In the College Graduate and
Expulsion cases some form of oversight would be
created, but it would likely be small in size and in
the expulsion case it would eventually end due to
ISAs being shut down. In the other two scenarios no
third party would form due to the insignificant
number of ISAs transacted.
BUSINESS AND FINANCIAL MARKET
IMPLICATIONS
Business implications have the greatest
breadth, impacting investors, funds, philanthropists,
debt markets, and potentially creating an entirely
new market as well.
ISA PROVIDERS AND PRIVATE INVESTORS
If the Income Sharing Agreement is able to
clear legal hurdles, it will have the potential to
become a popular college financing alternative. In
order for the ISA to gain a significant market share,
though, private investors would have to find a way
to successfully generate returns using it. Success
among private investors would be a major stepping
stone toward the preferred scenario, where the ISA
would gain market share to the point that it could
ultimately alleviate part of the debt burden on
college students in the United States. However, it is
highly uncertain whether these types of investors
would be able to successfully monetize the concept
given its risky nature.
Private ISA providers able to develop
predictive algorithms for a student’s earning power
would achieve immense success. Early adopters that
manage to develop a superior model and a
successful track record will be able to capitalize on
the huge crop of students in need of funding. If ISA
providers are able to generate profits to the point
that the concept is financially sustainable, the ISA
market will be dominated by investors looking to
make returns. This type of ISA marketplace would
be a controversial topic with critics.
DEBT MARKETS AND FEDERAL LOAN PROVIDERS
In a scenario where regulations prevent ISAs
from existing, traditional student loans and federal
programs will remain the norms for college funding.
Increasing tuition costs and rising debt rates would
remain a major threat, and universities could
ultimately face declining attendance and an
inevitably smaller proportion of students from low-
income families. In this case, the government would
likely have to implement new programs to support
the federal loan market, which would continue to
face high default rates. One potential implication for
the student debt market if the ISA were to become

~ 32 ~
extinct would be larger income based repayment
programs instituted by the government and even
private providers.
However, if ISAs were to gain significant
market share, they would alleviate some pressure
from the debt markets. This would lead to healthier
higher education funding, but private loan
originators would likely lose market share as a
result. Student loan providers would lose significant
business and the market landscape would likely
contract.
PHILANTHROPISTS AND NONPROFITS
Although the Income Sharing Agreement
offers an extremely high upside as an investment
vehicle, it is quite possible that profits would be
nearly impossible to achieve for ISA providers,
particularly within the short-term. This could mean
that ISAs become a non-profit philanthropic ideal,
through which wealthy individuals could help
students finance their education. A non-profit
program could manifest itself as philanthropy,
alumni networks, or universities. These parties
would offer Income Sharing Agreements without
the financial incentive, but would aid the student
debt crisis nonetheless. These programs are likely to
arise in most scenarios and with minimal scale.
They would be limited to local organizations and
individual schools and consequently the financial
impact would be far less. If these nonprofit
institutions have a positive effect on both the
philanthropist and the recipient, more colleges may
choose to adopt similar
plans further into the future,
leading to a larger ISA
market after all.
START UPS & VENTURE
CAPITAL
With investors partaking in ISA new
companies will look to create ISA products. In fact
this has been seen already with firms like “Upstart”
which temporarily issued ISAs before pausing their
system due to regulatory concerns. Moving forward,
in scenarios for which regulation passes, other
startups will join the ISA landscape. This will come
in many forms including peer-to-peer lending
platforms, ISA brokers, new ISA focused
investment funds, and others. These startups are
only likely to occur in an environment with
significant ISA regulation and support such as in the
Expulsion, College Graduate and Summa Cum
Laude scenarios. In the Expulsion scenario must of
these companies would fail facing legal issues down
the road.
Also, these new companies should receive
interest and support from venture capitalists. If the
startups prove their model and show promise
venture capital firms will look to get in on the
market with investments. Some of this has already
occurred with investors backing a number of ISA
and Income Based Repayment firms to this date. In
a pro-ISA market the amount of funding should
grow speedily along with the number of startups as
mentioned above.
CREATION OF NEW SECURITY EXCHANGE
Though somewhat of a wild card, there is
potential in the Summa Cum Laude scenario that an
ISA derivative exchange forms. Essentially, average
investors would be able to buy and sell shares in

~ 33 ~
various ISA funds. These funds would be traded
much like any other security or investment vehicle.
For example, much like a small-cap technology
mutual fund, an investor could invest in a “State
School Finance Major” fund of ISAs. This is
unlikely in the near future, but should it arise, there
would absolutely be major implications including
greater diversity for investment portfolios, extreme
changes to regulation and government oversight,
and accelerated growth for ISAs.
NEW EMPLOYMENT OPPORTUNITIES
Clearly an ISA marketplace would create new
employment opportunities. As discussed before,
there would be increased need for legal experts and
workers at the various startups. However, there are
less obvious roles that will be critical to ISA
success should they become popular. Primarily,
actuaries are absolutely necessary to value the risk
of an individual’s future cash flows. Much like the
role of actuaries in the life insurance industry,
actuaries in the ISA industry will have to consider
various risk factors for each individual helping ISA
investors design the best term structure for the
contracts. This will be most relevant in the heavy
ISA scenarios, including Summa Cum Laude and
Expulsion to start. For the College Graduate
scenario the actuaries will be relevant, but have
somewhat insignificant scale.
CONCLUSION
Considering the present college funding discussion, Income Sharing Agreements are in the room, but there
are many hurdles to overcome before they have a seat at the table. There is a general consensus that there is a
student debt crisis in America and critical stakeholders are brainstorming solutions to this dilemma. Many of
these individuals support ISAs as the best alternative to today’s norms; however, their backing alone is not
sufficient to make ISAs a viable option for students. Political supporters like Marco Rubio and Chris Christie
must convince their colleagues of ISA morality. Business leaders and investors like Marc Cuban need to market
the product to students and investors alike. Finally, universities should support the concept as a complement to
diverse financial aid packages.
Looking ten years from now, it seems unlikely all the stars will align. That said there should be movement
toward an ISA market in the time frame, and moving past the ten year mark, ISAs could find compounding
success. It all depends on regulatory progress and marketing quality. Once regulations make ISA investments
secure and students start considering them as a legitimate financing option, positive network effects will
motivate an ever stronger trend. Given the extra time to develop, ISAs should find success becoming a mainstay
in college financing portfolios.

The $260,000 Question: The Future of Higher Education Funding as it Relates to the Emergence of ISAs and the Growing Burden of Student Debt

The $260,000 Question: The Future of Higher Education Funding as it Relates to the Emergence of ISAs and the Growing Burden of Student Debt

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