Should I use an Income Share Agreement to Fund my Coding Bootcamp?

Many non-technical professionals are using software engineering bootcamps to upskill and reskill into IT roles. Almost 59,000 people graduated from bootcamps in 2022, which aligns with a steady year-over-year enrollment rate increase of 3%. That is quite a few students willing to pay $13,580, the average cost of a coding bootcamp, to improve their professional abilities and career outlooks. 

There are several ways to finance a bootcamp education. One popular method is an income share agreement. Let’s look closer at what it is so you can determine if it is an option you want to pursue to fund your bootcamp education.

What is an Income Share Agreement?

An income share agreement, or ISA, is an alternative financing method for students pursuing their education. Sometimes, you’ll also see it referred to as “income-based options” or “income-driven repayment.” Traditional methods like upfront payments or monthly installments require students to pay before or during their courses. ISAs do not require students to pay upfront or while they are completing their education, which makes them an attractive option for those who do not have the immediate means to pay for their education.

How exactly does an ISA work? An ISA is an arrangement with a bootcamp [or college] by which a percentage of a student’s income following graduation will be paid to the bootcamp [or college] for a fixed period. Students will complete their courses and, upon starting their jobs, begin making monthly payments. These payments have two main components: a set percentage of income and an overall repayment window.

With an ISA, you agree to pay a specific percentage of your salary every month to your university or bootcamp. This percentage does not change, even if you get raises, bonuses, or move jobs. An ISA’s second component is a repayment window. A repayment window is several months or years during which students are required to make percentage payments to their bootcamp.

Though these two components are static, ISAs still introduce variability in the total cost of your education, as rapid career advancement may lead to higher salaries and paying more to your bootcamp. We will talk about some of the drawbacks of ISAs later.

A final point on ISAs is that they are different from deferred tuition. Deferred tuition is similar to ISAs due to the lack of upfront or monthly payments during the courses. Instead of paying at the beginning, you are required to make monthly payments following your course completion. Unlike ISAs, the payment amount and duration are fixed and will not vary regardless of your career progression.

What are the Benefits of an Income Share Agreement?

ISAs have quite a few benefits for students, including avoiding the need for upfront money and providing lower costs for tuition. The first benefit to discuss is the barrier removed by not requiring students to pay before or during their courses. Upfront payments are a hurdle for disadvantaged students. In waiving upfront costs, ISAs make learning more inclusive and the bootcamp courses more diverse. Not everyone can pay over $10 thousand out of pocket. ISAs solve this by not requiring any upfront capital.

A second benefit of ISAs is no interest is attached to the loan. The principal amount, the actual amount you are borrowing, is often small compared to the amount of interest a student loan borrower may pay throughout their loan. Students with bad credit may get an even higher rate or may not qualify for a loan at all. ISAs are great as they don’t require interest, which may be too high or not offered for some students.

Another benefit of ISAs is the incentive they give bootcamps to focus on outcomes, not just enrollment numbers. Programs offering ISAs show they are confident their course will provide students with an education to get a job. If the student doesn’t land a job, they don’t require payment. This promise puts pressure on bootcamps to provide excellent instruction to ensure their students get a quality education and good-paying jobs that can compensate bootcamps for the risk of deferring payment.

What are the Downsides of an Income Share Agreement?

While there are certainly benefits to ISAs, they are not perfect. There are downsides you should consider before using them to finance your education. First, every aspect of your income will be impacted by your ISA. The percentage paid from your income will also be deducted from any overtime or bonuses you may receive. This is a reminder that the better you do, the more you will pay for your education.

Another downside of ISAs is the potential lack of payment floors. A payment floor is an agreed annual income minimum that triggers payments. This minimum salary can be reached whether or not it was met with the skills gained from your bootcamp or degree. This means you could end up working in a job unrelated to your education and still be required to pay a percentage of your income to the bootcamp.

The other drawback to ISAs is a possible absence of a payment cap. As stated before, the percentage of your income paid does not vary with the amount you make. If you have explosive salary growth while paying off your ISA, you may pay multiples more than the upfront cost of the bootcamp.

A final downside of ISAs is restriction on job movement. Part of the point of an ISA is to maximize the payments the bootcamp receives to offset the risk of not charging upfront. To maximize payments, they want former students to make as much as possible. ISAs may include clauses preventing students from taking jobs that would decrease their salary. This could be frustrating for students looking to make a lower salary for an opportunity with a startup or a company with a good work-life balance.

To avoid falling into any of these possible negative aspects of income share agreements, always read the terms carefully. Not all ISAs are the same.

Start Your Software Development Journey Today!

As we have learned, there are many ways to pay for your coding bootcamp. Income share agreements are a unique tool that makes learning to code more accessible for everyone. While ISAs expand who can learn to code, they may not be the best fit for every student. If you are interested in learning more about using an ISA to join TripleTen, reach out to one of our admissions counselors.

TripleTen offers several bootcamps including a part-time 10-month software engineering bootcamp. This is perfect for new-to-development students who want to learn how to style and create web apps, build out server and database code, and manage development operations. Naturally, we're flexible with how you cover your tuition. Check out our payment options today.