A Guide to Deferred Tuition and ISAs

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September 28, 2021

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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 have a set payment amount for a fixed amount of time, and the total tuition amount 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?

Pros

With a deferred tuition plan or ISA, you can usually start learning for free or after making a relatively small initial deposit. If you don't have the funds to pay upfront, this is a big perk.

If the bootcamp offers a money-back guarantee, you may not have to pay tuition at all if you can't find a job within a specified period of time. When offered, this guarantee often applies to students who pay tuition upfront, as well as those with deferred tuition plans and ISAs. Be sure to read all the terms and conditions of such guarantees.

Cons

A deferred tuition plan or ISA may come with strict requirements for how you conduct your job search, such as how many jobs you must apply to, how you apply, and which offers you must accept.

Depending on how much you make and your installment amount, you might still feel crunched in areas with a high cost of living, even if you have a full-time, salaried job. This is especially true for entry-level positions in popular tech cities like San Francisco and New York City.

With an ISA, you might end up paying a lot for your training — as much as a college degree, or even more. If a low total cost was one of the draws of a bootcamp in the first place, watch out.

What happens if you have to leave your bootcamp program before you finish? Or if you lose your job halfway through your repayment term? In these cases, you may still be on the hook for paying a large amount of tuition under difficult circumstances. You might even have to pay the remaining tuition immediately.

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:

Income Share Agreement Warning Signs

Too low of a minimum income threshold

Too long of a repayment term

Too high of a repayment cap (or no cap at all)

Too many restrictions during the job search

Too high of a percentage of your salary

Too few protections if you can't find an in-field job

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.

Initial Deposits and Withdrawal From the Program

While many bootcamps with deferred tuition plans and income share agreements allow students participating in those plans to start their program for free, many still require a down payment. This fee could be anywhere from a couple hundred to a couple thousand dollars. Keep this possibility in mind if you're not sure whether you have immediate funds to cover a deposit.

Another thing to watch out for is how much money you may be on the hook for if you don't finish the bootcamp or adhere to attendance rules. Some bootcamps give you a short trial period, but after that you may still have to pay all or some of the tuition outlined in your deferred tuition plan or ISA if you drop out early. Payments may even be due immediately after you leave the program.

Minimum Income Thresholds

Many deferred tuition plans and ISAs set a minimum salary level that a student must meet before they are required to pay back their tuition. This threshold varies by bootcamp but is often set at $40,000-$50,000. The ISAs offered by App Academy, Lambda School, Thinkful, and General Assembly all fall in this range.

Some bootcamps distinguish their ISAs by using a higher minimum income threshold, like Galvanize, which sets its threshold at $60,000. On the lower end, Coding Dojo's minimum salary threshold is set at just $32,000.

Remember that you can't fully judge an ISA based on minimum income threshold alone — you must also look at other terms and requirements.

Repayment Schedule, Salary Percentage Rates, and Term Limits

The percentage of your salary you need to pay in an ISA, and how long you are required to make payments, can impact the total cost of your tuition dramatically. When you're researching these payment options, be sure to ask the following questions:

How much time do I have to find a job before I must start making payments? What happens if I am unable to find a qualifying position in that time frame? Once I start making payments, can I pause payments in case of job loss or periods of increased financial need?
Repayment Caps

Unlike deferred tuition plans, your total payment amount for an ISA isn't fixed in advance. What's to stop you, then, from paying an incredibly large tuition amount if you happen to find a lucrative position? In some cases, nothing. But in other cases, that's where repayment caps come in.

A repayment cap cuts off, or "caps," the total amount you need to pay at a certain level, often around 1.5 times the upfront tuition cost. So if a bootcamp costs $10,000 upfront, you may only be on the hook for up to $15,000 or until the end of your repayment term, whichever comes first. In the case of a high-paying job, you may hit that limit sooner rather than later.

Repayment caps protect you from potentially paying an unreasonably large amount of tuition for your bootcamp, so they are a good feature to look for when shopping around.

Job Requirements

Some ISAs and deferred tuition plans come with strings attached regarding your job hunt. They may have rules about how many jobs you need to apply for and/or how many networking events or informational interviews you must attend; they may also require mandatory career coaching sessions.

You may have to accept the first job offer you receive, whether or not you actually want that position. And even if you can't find a job that's related to the bootcamp training you just received, you might still have to start paying back your tuition.

Make sure you do your homework and ask the deferred payment plan/ISA provider the following questions:

What counts as a "qualifying job"? Will I have to pay if I can't find in-field work? What if I can only find work as a contractor or freelancer? Do I have to accept the first job offer I receive? What if I'm offered a position below the minimum salary threshold and I want to take it? What if I want to quit my job, or I get fired? Do payments pause until I find a new position? If so, is there a limit on how long they pause for?

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.

Popular Bootcamps Offering Deferred Tuition Plans

Popular Bootcamps Offering Income Share Agreements

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.

true Loans

Another way students can pay for a bootcamp is by taking out a loan. Since bootcamps aren't accredited, students don't qualify for federal financial aid. But there are a few private lenders that target bootcamp students specifically. Loan terms offered by one of these vendors may be more favorable than other personal loans.

Some loans allow you to defer payment until after you finish your bootcamp, such as Bottega's Skills Fund loan, which defers loan payments for up to three months after you graduate.

If you can find an agreement with deferred payment options and a relatively low rate, a loan may be a better option than an ISA. Be sure to compare the cost and conditions of a loan with those of an ISA or deferred payment plan when considering your options.

Scholarships

Many bootcamps and some third-party organizations offer scholarships to bootcamp students who demonstrate financial need. These scholarships often target students who are members of underrepresented groups in the tech industry, such as people of color, women, nonbinary and LGBTQ+ students, students with disabilities, and veterans.

Many bootcamp scholarships only provide a partial tuition discount of $1,000-$2,000, though some offer more substantial awards and even full rides.

GI Bill®

The GI Bill provides another source of bootcamp funding for military members, veterans, and their families. Though not all bootcamps accept GI Bill funding, many do. If the GI Bill applies to you, explore our guide on using the GI Bill to pay for a bootcamp and browse our list of GI Bill-eligible bootcamps.

Additional Resources

How to Pay for a Coding Bootcamp Coding Bootcamp Scholarships Student Loan Options for Coding Bootcamps

GI Bill® is a registered trademark of the U.S. Department of Veterans Affairs (VA). More information about education benefits offered by VA is available at the official U.S. government website at https://benefits.va.gov/gibill/index.asp.


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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BestColleges.com is an advertising-supported site. Featured or trusted partner programs and all school search, finder, or match results are for schools that compensate us. This compensation does not influence our school rankings, resource guides, or other editorially-independent information published on this site.

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