Checking in on the state of ISAs

Income share agreements (ISAs) rose to public awareness this year — if measured in press articles and discussion on “VC Twitter” — after several years of niche experimentation among a small community of education advocates. An ISA in a financing model where the student participates in an education program without paying tuition, then pays a certain percentage of their income for a set period of time in return.

As I mentioned in my analysis of ISAs back in April, there is rapid growth in ISA pilots by traditional universities in the US and by vocational training programs but there’s also a lot of regulatory uncertainty. This isn’t a scenario where private sector leaders are seeking less regulation and activists wanting more: private sector leaders are actively lobbying more regulation so there are protections against discrimination and predatory behavior — many fear one bad actor ruining the reputation of the entire movement — and are seeking legal clarity on a range of issues like the tax implications of an ISA on all parties involved.

The ISA Student Protection Act is currently making its way through Congress with bipartisan sponsorship from Senators Todd Young (R-IN), Marco Rubio (R-FL), Mark Warner (D-VA), and Chris Coons (D-DE). The Department of Education’s Diane Auer Jones said the department is planning to pilot an ISA program, to which Senator Elizabeth Warren issued a letter demanding detailed explanation of the plan and the potential negative impacts.

I asked several of the entrepreneurs, investors, and policy experts at the forefront of ISAs to share their perspectives on the current state of the ISA movement:

• Tonio DeSorrento, Vemo Education
• Ethan Pollack, Aspen Institute
• Shaan Hathiramani, Flockjay
• Austen Allred, Lambda School
• Alison Griffin, Whiteboard Advisors
• Sam Lessin, Slow Capital
• Terri Burns, GV
• Kristen Sharp, Entangled Solutions
• Leo Polovets, Susa Ventures
• Jan Lynn-Matern, Emerge Education

Here’s what they had to say…

Tonio DeSorrento, Founder & CEO of Vemo Education

“What’s been really fascinating, in recent years, is the innovation that is occurring at colleges and universities that are using ISAs to support and improve student success.

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