Is ISA a Good Idea for Bootcamps?
What is ISA?
Technically speaking, an Income Share Agreement (ISA) is a monetary arrangement which provides for a service to an individual, on a condition that they agree to pay back a percentage of their income for a fixed amount of time — which could be months or even years.
How does ISA work in coding bootcamps ?
It is more than common to have financial constraints coming in the way of your pursuit of passion. Same is the case when it comes to enrolling into that perfect coding bootcamp that you found for yourself. There are alternatives like applying for a sponsorship or even deferred tuition, but ISA is a whole different ball game.
ISA lets you continue your bootcamp course without having to pay a penny upfront and you have time until you find a job for yourself. Once you’re placed, you are required to giveaway a percentage of your income every month to repay the bootcamp. Sounds simple? Wait till it gets tricky!
Why do people go for ISA
Let’s try to understand why ISA has become so popular and is widely being accepted. ISA may not seem like the noblest thing but, credit where credit’s due, it makes bootcamps work towards quality training. Bootcamps in-turn become accountable to themselves when it comes to job placements of their bootcampers. They make sure that their students learn and perform par excellence in their chosen course.
Guess who benefits from that? Students, exactly.
Another obvious perk is that, for broke college students, “ISA saves the day!” keeps ringing in their ears. It seems to be the perfect solution for them and way better than student loans as there is 0% interest (seemingly) and they only expect you to pay back when you’ve landed a job.
Doesn’t sound too good to be true?
So why is ISA bad?
The name itself kind of gives it away. Income share agreement. Which means you’re bound to share whatever amount of income you’ll be getting for years to come. This plays out badly in two very common scenarios.
Scenario 1
You land a high paying job, so high that the percentage you’ll be repaying the bootcamp is way above the actual amount of the course.
Scenario 2
You land a job with minimum required pay and you still have to share that minimum income with the bootcamp.
Another problem that you may realize in the later stages of the agreement is that you could’ve saved up for a period of roughly half a year and repaid the amount had it been a student loan, but since you’re bound with a share agreement, you cannot choose to pay it off all at once, and need to continue for years to come. Though there are many variations of ISAs (which is another overlooked drawback), the things we’ll be discussing apply to almost all bootcamps offering ISA.
Speaking about variations,
So many questions, so many clauses!
When you dig deeper, you’ll find that there are so many questions that need to be answered before you sign up for an ISA.
How much time do you have to get a job?
You may want to jump right into job hunting as soon as you’re done with your bootcamp program, or you may not. The concern is, would you have the freedom to apply for jobs as and when you’d like to?
Are you obliged to accept the first offer letter that you receive?
You get an offer letter you weren’t looking forward to, so you want to pass. But the pay is enough as per your ISA’s requirement. Do you need to accept it either way?
Do you share your promotion and incentives too?
So if you land a very high-paying job and you’re already giving a percentage of that high stipend to the bootcamp, some good news may not sound so good.
Imagine celebrating a raise, and also imagine realizing that you’ll now be paying more of your money to the bootcamp.
And the same ‘happy realization’ moment follows on receiving all your incentives and bonuses that get credited to your account as your income!
What if you get a better job offer than your current one?
With multitude of clauses in your ISA, one of them may also restrict you from switching jobs whilst you’re still under the agreement. Some ISAs allow you to terminate the agreement before its term is over, for a certain amount of money.
The culmination of all these factors will have an unpleasant effect on your career decisions.
Is ISA really interest free?
Fun Fact
You may end up paying more in ISA when compared to federal loans or even private student loans!
Let’s take Noel as an example,
Noel is a college graduate and is not financially well-off.
He wants to study Data Science in a coding bootcamp, something he couldn’t do in his college.
He logs on to bootcamps.tech and finds a coding bootcamp (say Alpha Bootcamp) that suits him perfectly.
The only problem now is, he has no money to pay for the program.
When Noel finds out about the ISA offer that Alpha Bootcamp is making, he sees it as the perfect opportunity to be able to afford the training.
He feels extremely comfortable with the idea that he will be asked to repay the bootcamp only after he gets a job!
So he opts for the Data Science program which costs about $30,000. After 4 months, he has graduated from the bootcamp and lands a job with starting salary of $10,000.
The ISA stated that he needs to pay 10% of his monthly income for coming 4 years, which amounts to $48,000. So Noel’s paying roughly $18,000 more than he would have, had he paid upfront.
In the last two years of his ISA term, Noel also got a raise of $2,500! Which means he’d be giving $6,000 more on top of the extra $18,000 that he was already paying. (I told you it gets tricky!)
That’s a total of $54,000 which is $24,000 more than the actual cost of the course.
Doesn’t sound so good now does it?
Debt is not good.
Prolonged debt is bad.
Indefinite debt is a nightmare.
So make your decision wisely, try answering few of the questions we discussed above when considering an ISA, and it won’t take you more than 3–4 answers before you know what you need to do!
You can check out all the payment options that bootcamps offer around the world on Bootcamps.tech.
Hope you find your match!
Yours technically,
Team Bootcamps.tech
