Which Bootcamp Payment Option Is Best?

You've decided to attend a bootcamp to launch your new tech career quickly. But even though bootcamps cost less than the average four-year college degree, they can still be quite expensive — the average bootcamp will set you back about $13,500.

Unless you have a hefty savings account balance, you may need to find an alternative way to pay for your bootcamp, other than simply paying your tuition upfront. This guide can help you understand three common ways to finance a bootcamp: income share agreements (ISAs), deferred tuition plans, and bootcamp loans. We'll discuss the pros and cons of each of these bootcamp payment options and help you decide which might be best for you.

What Are Income Share Agreements?

Income share agreements allow students to start their education at no cost or with a small upfront deposit. The student agrees to pay a percentage of their income for a predetermined amount of time after completing the bootcamp. Typically, graduates pay 10-20% of their income for 2-4 years under an ISA.

Some income share agreements are offered through a third-party ISA provider or servicer, such as Leif, but many are offered directly by the bootcamp. Bootcamp ISAs vary significantly depending on the bootcamp provider, but many now come with a repayment cap — such as 1.5 times the upfront tuition cost — to prevent graduates from paying a surprisingly high price for their bootcamp.

Most ISAs also come with a "minimum salary threshold," which often ranges from $40,000-$60,000. Graduates only start repaying their tuition once they find a job with a salary level higher than the minimum threshold.

Income share agreements can be confusing and potentially risky. Depending on your salary level, you may end up paying less for the bootcamp than other options — or considerably more. Make sure you read the fine print when exploring this option.

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What Are Bootcamp Loans?

If you've been trying to figure out how to pay for a coding bootcamp, you've probably noticed that many bootcamps offer loans. Some bootcamps partner with private loan providers that offer loans specifically for bootcamp students, such as Climb Credit, Earnest, Skills Fund, and Upstart.

Since bootcamps aren't usually accredited, bootcamp students do not qualify for federal financial aid or federal student loans. Most student loans from private lenders also require students to enroll in an accredited degree program.

Bootcamp students can take out a personal loan to pay their bootcamp tuition, or they can apply for a loan specifically tailored for bootcamp students. These bootcamp loans may have a better interest rate than other personal loans, and they may come with more flexible repayment arrangements. (Although it's always worth comparing loan rates from multiple lenders, including private lenders who aren't focused on bootcamp loans.)

For instance, some loan providers offer bootcamp students the option to make interest-only payments until three months after they finish their bootcamp, or to defer payments completely until three months after graduation.

Most loans require a minimum credit score for qualification. Students with less than stellar credit may be able to qualify with the help of a co-signer. Some lenders also offer loans to help cover living expenses incurred while attending the bootcamp.

Learn more about bootcamp loan options  

What Is Deferred Tuition?

Deferred tuition plans also allow students to start their bootcamps for free or with a small deposit and pay the rest of the tuition after completing the bootcamp and finding a job.

Unlike ISAs, graduates do not pay a percentage of their income with deferred tuition plans. Instead, they pay a fixed amount in installments over a set amount of time that is agreed upon before the bootcamp starts. The tuition amount for a deferred tuition plan is usually higher than the upfront cost of tuition, often 1.3-1.7 times higher.

Sometimes you may see a bootcamp call an income share agreement a "deferred tuition" agreement, but remember that the key difference is whether you pay a percentage of your income or a pre-set amount.

You may also see private loans with "deferred payment" options. It can be confusing to tell all of these options apart, but there are several key differences between a deferred tuition plan and a loan with a deferred payment start date.

A student making loan payments typically pays the upfront bootcamp tuition cost plus interest, while a deferred tuition plan offered directly by a bootcamp does not have interest but charges a higher tuition amount than the advertised upfront cost for the program.

With a loan, you may be able to lessen the overall cost by making higher monthly payments or additional payments, lowering the amount of interest that you pay. Alternatively, with a deferred tuition plan, the total cost is set from the beginning.

Deferred tuition plans also don't kick in until you find a job, whereas loans with a deferred payment start date require you to start paying at a certain time (such as three months after you graduate from the program), regardless of whether you have found a job by that date or not.

Learn which bootcamps offer deferred tuition  

Which Bootcamp Financing Option Is Best?

So which bootcamp financing option is best? It depends on your financial situation, the specific terms offered by a bootcamp, and your priorities — such as paying the cheapest overall cost, finding the lowest monthly payments, or following the most flexible repayment schedule.

In terms of overall cost, the least expensive option will almost always be to pay the full tuition upfront. If that's not possible for you, you might be a good fit for any of the three payment options discussed in this guide.

A loan may be right for you if you have good credit or a co-signer to help you qualify, depending on the conditions of the loan. Because you typically have the freedom to pay off a loan early, you may not be on the hook for as much money as you would in an income share agreement or deferred tuition plan — especially if you secure a job with a lucrative salary.

If you don't have the best credit, an ISA or deferred tuition plan may be your best option. However, with either choice, you'll need to be committed to finding a tech job immediately after completing the bootcamp.

A good way to pick the best financing option is to first explore potential bootcamps based on their curricula, student outcomes, and learning formats. Then, compare the specific costs, terms, and conditions of each bootcamp's payment options. You may discover that the overall price of one bootcamp's ISA is less than the deferred tuition plan of another, or vice versa. If finding the cheapest option is a priority, you'll need to do some research and get all the details to really know which is best.

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Editor's Note: This article contains general information and is not intended to be a substitute for professional advice. Please consult a professional advisor before making decisions about financial issues.

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