An Introduction to Income Share Agreement (ISA) in Canada
If you are a student in Canada and are looking for financing options to pay for your education, you might have heard about the Income Share Agreement (ISA). ISA is a type of financing that allows students to pay for their education through a percentage of their income after graduation. In this article, we will discuss everything you need to know about the Income Share Agreement in Canada.
What is an Income Share Agreement?
An Income Share Agreement (ISA) is a financing model that allows students to pay for their education through a percentage of their income after graduation. The concept of ISA has been gaining popularity in recent years as it is considered a more flexible and affordable alternative to student loans.
How Does Income Share Agreement Work?
In an ISA, a student receives upfront financing for their education, and in exchange, they agree to pay a fixed percentage of their income for a fixed period after graduation. The percentage and the duration of payment depend on the individual`s income level and the terms of the agreement.
For example, if a student receives $10,000 through an ISA and agrees to pay 5% of their income for ten years after graduating, they will be required to pay $500 per year for ten years. The payment amount will vary based on the student`s income, and if they earn less than a set threshold, they may not be required to make payments.
What are the Benefits of Income Share Agreement?
Income Share Agreement offers several benefits to students who are looking for financing options to pay for their education. Some of these benefits include:
1. No Interest:
Unlike student loans, Income Share Agreement does not accrue interest, so students do not have to worry about the increasing cost of borrowing.
2. Flexibility:
Income Share Agreement offers greater flexibility than student loans as the payment amount is based on the student`s income level.
3. Security:
Income Share Agreement provides security to students as they do not have to worry about making payments if they are unable to find a job after graduation.
4. Shared Risk:
Income Share Agreement involves sharing the risk between the student and the investor, which means that the investor has an incentive to ensure that the student`s education leads to a successful career.
Are Income Share Agreements Available in Canada?
Income Share Agreement is a relatively new concept in Canada, and as of now, there are only a few companies offering this financing option. However, the demand for ISA in Canada is increasing, and more companies are expected to start offering this financing option in the future.
Conclusion
Income Share Agreement is a financing model that offers several benefits to students who are looking for financing options to pay for their education. While this financing option is relatively new in Canada, it is gaining popularity, and more companies are expected to start offering ISA in the future. If you are a student looking for financing options, Income Share Agreement might be worth considering.