ISAs: Loans or Debt Traps?
Recently, I came across a potential solution to redress the financial hurdles that limit access to tertiary education. This solution is called an "Income Sharing Agreement" ( hereinafter ISA). According to Batya Bankers , ISAs are like equity investments. An individual ... allows investors to buy ‘shares’ in their future earnings while contributing to social value through sustainable empowerment. Students receive interest-free funds to cover their tuition fees on condition that they agree to pay the lender a specified fraction of their future earnings. By grouping these investments in individuals, lenders are able to offset risks as returns from higher earners hedge the potential losses from lower earners. Based on this definition, ISAs seem perfectly positioned to connect individuals in need of vast resources, with individuals controlling those resources. They provide vulnerable people without the means to earn or secure collateral - what you give a bank in exchan...