A Guide to Deferred Tuition and ISAs

Since entering the scene in the early 2010s, coding bootcamps have exploded in popularity. As of 2021, over 150 bootcamps operate in the U.S., training thousands of students in technical disciplines like web development, software engineering, cybersecurity, UX design, and data science. One of the first and largest bootcamps, General Assembly, has graduated over 40,000 students alone.

Why the sudden popularity? One reason is the booming tech industry and the abundance of high-paying, in-demand jobs. Another is the relatively short time investment and lower cost of a coding bootcamp compared to many bachelor's and master's programs.

Still, bootcamp training doesn't come cheap. The average bootcamp costs around $13,500, based on data collected by BestColleges in 2020 from about 130 bootcamp providers.

Because bootcamps lack accreditation, bootcamp students can't access federal financial aid as they can when attending an accredited college or university. In addition to scholarships and loans, bootcamps offer alternative ways to pay, with options like deferred tuition plans and income share agreements (ISAs).

The following guide will walk you through deferred payment and income share agreement pros and cons, and give you tips on what to watch out for when researching these payment options.

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What Is Deferred Tuition?

Deferred tuition plans don't require students to pay their tuition upfront. Instead, students may pay a small deposit or start their bootcamp with no money down. Only after they graduate from the bootcamp and find a job — ideally in their new field — do they repay their tuition in monthly installments.

Deferred tuition plans require students to pay back a set amount of money over a fixed period of time. The total amount you'll need to pay for tuition under a deferred plan is usually higher than what you would pay upfront.

For instance, the total deferred cost of Springboard's software engineering bootcamp is about 1.4 times the upfront cost of tuition, while its cybersecurity bootcamp is about 1.7 times the upfront cost. Hackbright Academy's deferred tuition costs are 1.3-1.5 times higher than the upfront costs.

What Is an Income Share Agreement?

An income share agreement is similar to a deferred tuition plan, except that instead of paying back a fixed amount of tuition, graduates pay back a set percentage of their salary for a specific amount of time.

Both the percentage rate and number of payments a graduate must make are determined in advance when signing the agreement. What isn't determined, of course, is the graduate's future salary. As a result, individuals may end up paying a large amount in tuition overall if they earn a high salary.

An income share agreement is similar to a deferred tuition plan, except that instead of paying back a fixed amount of tuition, graduates pay back a set percentage of their salary for a specific amount of time.

Percentage rates and repayment terms vary but typically fall in the range of 10-20% for 2-4 years. Some ISAs that require only 10% of a graduate's salary, such as those offered by Galvanize and General Assembly, have a repayment term of four years, whereas ISAs with higher percentage rates may have shorter terms, such as Rithm School's ISA, which requires 17% of a graduate's salary for two years.

Many income share agreements also have repayment caps that limit the total amount of tuition you are responsible for paying. Generally, repayment caps hover around 1.5 times the upfront tuition cost. If you reach the payment cap before your repayment term expires, you stop paying.

Because of all the specifics involved, you should crunch the numbers carefully when comparing ISAs from multiple bootcamps, or comparing an ISA with another payment option like a deferred tuition plan or a traditional loan.

What's the Difference Between Deferred Tuition and an Income Share Agreement?

Deferred tuition plans and ISAs have a lot in common. The major difference is that deferred tuition plans state a fixed dollar amount for tuition that needs to be repaid, while the total dollar amount you pay under an ISA isn't set in advance.

This difference may make deferred tuition plans the safer bet since you know from the outset exactly how much you'll be paying for the bootcamp. With an ISA, if there's no repayment cap, you may end up paying two or three times as much as the upfront tuition, depending on your starting salary.

If there's a repayment cap in place, however, the difference between the two options may be minimal. Depending on the bootcamp, you might end up paying about 1.5 times the upfront tuition cost with either an ISA or a deferred payment plan.

What Are the Pros and Cons of Deferred Tuition and Income Share Agreements?

How Are Income Share Agreements Regulated?

Unlike loans, income share agreements and deferred payment plans are not federally regulated, and they also remain largely unregulated at the state level. This means that individuals who enter into these payment options probably won't have the benefit of consumer protection measures.

Unlike loans, income share agreements and deferred payment plans are not federally regulated, and they also remain largely unregulated at the state level.

These financial agreements are relatively new in the educational and career training industries, and more regulation may appear over time. But whether that regulation introduces more safeguards for students or outlines permissive policies benefiting ISA providers at the expense of students remains to be seen.

Legislators from multiple states have proposed bills and introduced language into existing regulations that would differentiate ISAs from other types of loan debt. How ISAs are classified — as a "loan," "debt," or a different kind of financial product — will be crucial in determining whether ISAs need to abide by the same consumer protection laws that apply to loans.

A few states hold a stricter interpretation of ISAs — at least for now. In Iowa, for example, ISAs fall under the Iowa Consumer Credit Code, and the Iowa attorney general's website warns students about ISA debt. Likewise, New York does not allow ISAs due to a regulation prohibiting students from paying different tuition costs for the same educational program.

In California, income share agreements do not comply with regulations that require total tuition costs to be provided to students before they enroll, leading the California Bureau of Private Postsecondary Education to fine California bootcamps offering ISAs.

How ISAs are classified — as a “loan,” “debt,” or a different kind of financial product — will be crucial in determining whether ISAs need to abide by the same consumer protection laws that apply to loans.

Because of these rules, some bootcamps, like App Academy and Lambda School, offer a set deferred tuition plan for California and/or New York students, while still offering ISAs for students in other states.

At the federal level, a bill was proposed in 2019 that aimed to promote ISAs, though it received criticism for potentially undermining student protections. Ultimately, the bill failed to pass.

What to Watch Out for With Income Share Agreements

No two ISAs are exactly the same, so you should always read the fine print carefully, especially since it's such an unregulated market with few consumer protections. Many deferred tuition plans and income share agreements come with a multitude of strings attached, from requirements about how you look for a job to rules about how long you have to pay them back.

Below, we discuss a few key points you should investigate when looking into one of these payment options. In a nutshell, here's what you should be wary of when considering an ISA:

We'll talk about each of these warning signs in more depth below. For a detailed look at specific ISA terms, read our guide on how to evaluate income share agreements. You can also take a look at these sample ISA agreements provided by Coding Dojo and Lambda School.

Which Bootcamps Offer Deferred Tuition Plans and Income Share Agreements?

ISAs and deferred tuition plans are becoming more common, with many of the most popular bootcamps offering at least one option. Smaller, less popular bootcamps may also offer these payment options, but university-affiliated bootcamps typically do not.

Note that while the terms "deferred tuition plan" and "income share agreement" are generally used in the way we've defined here, some bootcamps may call their ISA a "deferred tuition" option. It can be confusing, but just remember to read the details and ask questions.

You can also check out our list of bootcamps with deferred tuition plans.

What Are the Alternatives to Income Share Agreements?

If a bootcamp's upfront cost is too high for you, there are other bootcamp payment options beyond deferred tuition and income share agreements.

Additional Resources

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