Tiffany Wise had a plan. That was to finish her bachelor\u2019s degree in computer science and start a career in software engineering. But after making her way through the four-year degree program and taking out a traditional student loan to cover the costs, life happened. Tiffany\u2019s mother fell ill, prompting her to pause her plan and care for her mother.<\/p>\n\n\n\n
That was three years ago. <\/p>\n\n\n\n
This year, Tiffany is determined to make her way into the tech industry and become a professional software engineer. Helping her get there are San Francisco-based software engineering training school Outco and an income share agreement<\/a>. <\/p>\n\n\n\n In the age of automation, the new norm is to upskill or perish. Tiffany knew that to secure a software engineering role, the skills and knowledge she picked up from three years ago would not suffice. Rather, she would have to catch up with the new tools, technologies, and techniques of the trade. <\/p>\n\n\n\n She found Outco, a training school that offers a four-week accelerated program for aspiring software engineers. Unlike coding bootcamps, Outco doesn\u2019t teach software engineering from the ground up. <\/p>\n\n\n\n Instead, the school focuses on equipping students with critical job search skills so they can articulate and demonstrate their software engineering skills during technical and behavioral interviews.<\/p>\n\n\n\n The school appealed to Tiffany for two reasons. <\/p>\n\n\n\n First, she already had a sound understanding of the field and even had a portfolio of projects to prove her skills. What she needed was a program that would help her build upon these skills and help her accelerate her job search.<\/p>\n\n\n\n Second, the school offered a financing option that would allow her to complete her training without paying upfront provided that she agreed to pay a percentage of her income later on. <\/p>\n\n\n\n This financing option is called the income share agreement. <\/p>\n\n\n\n An income share agreement or ISA<\/a> is a type of loan that binds a school to provide training without up-front payment. In exchange, the school gets a fraction of the student\u2019s future gross earnings over a set period, so long as the student\u2019s salary lies within a specified range. <\/p>\n\n\n\n The main point of an ISA loan is two-tiered. First, it steers students away from having to pay thousands of dollars at once or incurring traditional student loan debt to get the training they need to advance their careers. Second, it can incentivize the school to step up and make sure its students are equipped to enter the workforce.<\/p>\n\n\n\n An income share agreement will remain binding until one of three conditions are fulfilled\u2014whichever comes first:<\/p>\n\n\n\n Different income share agreements come with different terms and conditions. In this section, we\u2019ll break down income share agreement terms to help you get a better grasp of what you\u2019ll need to evaluate when considering this financing method.<\/p>\n\n\n\n Note that the following terms are what you\u2019ll commonly come across when considering an ISA<\/a>. Depending on the program, the ISA you\u2019re considering may have some or all of the features below.<\/p>\n\n\n\n Most ISA providers give you a few months to search for a job and organize your finances before the payment period begins. This helps ease the pressure of having to secure a job immediately after graduation and make payments.<\/p>\n\n\n\n For most ISAs, payments only kick in once you\u2019re earning above a certain monthly gross minimum income threshold. As long as you provide adequate documentation that you\u2019re unemployed or earning below the threshold, your ISA will remain paused until your pre-tax income rises above the threshold.<\/p>\n\n\n\n If your gross monthly earnings are under the threshold for some time, you could pay less than the amount you received to finance your education. Alternatively, if your earnings are above the threshold, you could pay more than the amount you received\u2014up to a maximum amount called the payment cap.<\/p>\n\n\n\n As part of the agreement, you\u2019ll need to submit proof of employment (and income) or unemployment to your school\u2019s ISA provider as stipulated in your contract. <\/p>\n\n\n\n Qualifying for deferment means you won\u2019t have to make ISA payments while your ISA is paused. Deferment eligibility varies by program, so be sure to check yours. Here are a few scenarios that could qualify you for deferment, depending on your program: <\/p>\n\n\n\n The income share percentage refers to the fixed percentage of income you pay once you land a job that pays above the minimum income threshold. How does this work? <\/p>\n\n\n\n Say your ISA has a minimum income threshold of $3,333.33 monthly (equivalent to $40,000 annually), and the income share is set at 10 percent of your gross income. This means you\u2019d pay 10 percent of $3,333.33, which is equivalent to $333.33 each month. If you got a raise and started earning $5,000 per month, you\u2019d still pay 10 percent of your income: $500 per month.<\/p>\n\n\n\n The payment window is the period during which your income share agreement remains active. Once your ISA reaches the end of the payment window, the agreement will be considered fulfilled, as long as you\u2019ve remained in compliance with your ISA. That\u2019s true even if you have not made the maximum amount or number of payments. <\/p>\n\n\n\n The payment cap refers to the maximum amount you\u2019ll need to pay to end your income share agreement. So whether you\u2019re only halfway through the payment window or you\u2019ve only made half of the maximum number of payments, your ISA payments will stop if you hit the payment cap.<\/p>\n\n\n\n Outco offers two ISAs. The first option stipulates a $0 up-front fee in exchange for 10 percent of your gross monthly income for six months. Your cumulative payment must also total at least $5,500, which is the cost of the program if paid upfront. <\/p>\n\n\n\n The second option commits you to pay a $1,500 deposit before the program begins. Once you land a job post-program, you\u2019ll have to pay six percent of your pre-tax income over three months. Your cumulative payment must be $4,000 or more.<\/p>\n\n\n\n Neither option comes with a minimum income threshold or a payment cap. Rather, the ISAs come with a 30-day grace period and a guarantee: \u201cA job you accept, or your money back.\u201d <\/p>\n\n\n\n \u201cThey said they will give you all your money back even if you got an offer but maybe didn\u2019t like that offer. I thought, \u2018well that\u2019s an interesting guarantee,\u2019\u201d said Tiffany. \u201cThey do have requirements that you have to meet,\u201d she added. <\/p>\n\n\n\n \u201cI have to attend all the lectures and do their resume workshops and homework. There\u2019s also a career mentor that I will work with. There are a lot of requirements, but as long as you do all of them and you don\u2019t like the offer [or get an offer], then you don\u2019t have to pay. That\u2019s how it works. I\u2019m surprised they\u2019re willing to do that but it sounds pretty cool.\u201d<\/p>\n\n\n\n To clarify, Outco guarantees that if you fulfill its participation requirements, you will find and accept a job offer for a qualifying position within one year of starting the program. Otherwise, if you paid a $1,500 upfront deposit, Outco will grant you a refund and your ISA will be rendered complete. If you signed up for the $0 upfront fee ISA and didn\u2019t get an offer for a qualifying position within a year, Outco will likewise waive your ISA.<\/p>\n\n\n\n For a role to qualify, it must be related to tech or software. This means that if Tiffany lands a job outside those fields despite fully participating in Outco\u2019s training sessions, her ISA will be in deferment status until she gets a qualifying position or until the one-year payment window closes.<\/p>\n\n\n\n With this guarantee in mind, Tiffany opted to sign Outco\u2019s first ISA option: pay nothing up front in exchange for 10 percent of her gross monthly income for six months. \u201cI just like not having to worry about it until you can actually afford to pay for it,\u201d she said. <\/p>\n\n\n\n \u201cI can also focus more on learning,\u201d said Tiffany, who is into her second week of the one-month program. \u201cEven though I have a job right now, I feel like I might have to work more if I\u2019m currently paying [tuition] while also trying to learn.\u201d<\/p>\n\n\n\n \u201cI also think that because [the payment term] is only six months, that makes it much better. If it were longer, then I\u2019d be concerned because who knows what other bills might come up. So the six-month window did make me feel a lot better,\u201d added Tiffany.<\/p>\n\n\n\n At the moment, Tiffany is working as an ambassador for edtech company Career Karma<\/a>. There, she welcomes users of the Career Karma app who, like her, aspire to one day work in the tech industry. <\/p>\n\n\n\nTiffany Upskills in Software Engineering<\/h2>\n\n\n\n
What Is an Income Share Agreement and How Does It Work? <\/h2>\n\n\n\n
How Do You Fulfill an Income Share Agreement?<\/h2>\n\n\n\n
What Do I Need to Know About Income Share Agreements? A Glossary of Key Terms<\/h2>\n\n\n\n
Grace Period<\/h3>\n\n\n\n
Minimum Income Threshold<\/h3>\n\n\n\n
Income Verification<\/h3>\n\n\n\n
Deferment<\/h3>\n\n\n\n
Income Share Percentage<\/h3>\n\n\n\n
Payment Window<\/h3>\n\n\n\n
Payment Cap<\/h3>\n\n\n\n
Outco\u2019s Income Share Agreement: Terms and Conditions<\/h2>\n\n\n\n
The Bottom Line <\/h2>\n\n\n\n