WTF are ISAs? (and can they transform education and spark a startup wave?)

Soaring college tuition prices have left Americans drowning in debt without a correspondingly enhanced set of professional skills to show for it. In the past 11 years, US student debt has increased by 157% and 1 in 10 borrowers are over 90 days delinquent.

Universities are incentivized to be unaffordable and don’t have a direct financial interest in the outcomes of their students. The average budget for career services at colleges is $90,000 including salaries, with only one career counselor for every 2,900 students on average.

Income share agreements (ISAs) have been developed as a financing model that could reshape the way education programs operate by aligning interests while expanding access to those programs and limiting payments only to what graduates can afford.

Lambda School may be the most notable startup advancing this model, having closed a $30 million Series B in January. But ISAs are neither simple to implement nor uncontroversial in policy circles.

from TechCrunch https://ift.tt/2FOVCA6