Coding Bootcamp Deferred Tuition and ISAs: A Guide
One of the biggest factors that you’ll likely be considering when choosing a coding bootcamp is cost. Coding bootcamps are an expensive investment: many bootcamps are priced upwards of $10,000, which represents a big financial commitment.
Traditionally, the ways you could finance a bootcamp education were through paying on lump sum upfront, or by taking out a loan and repaying that loan in installments. However, these payment options do not serve everyone: for the debt averse or people with no savings, these options do not work effectively.
That’s why, in recent years, coding bootcamps have been experimenting with two new methods of financing: deferred tuition and Income Share Agreements (ISAs). These payment options give you the ability to attend a training program without having to pay upfront or take out a loan which would accrue interest over time.
But what is “deferred tuition,” and what are ISAs? More importantly, how do they work? Those are the two questions we are going to answer in this article. By the end of reading this article, you’ll have a clear understanding of deferred tuition and ISAs, and how they work.
What is Deferred Tuition?
Deferred tuition is a method of education financing where, instead of paying upfront, you’ll pay for your education once you graduate and find a job. Some deferred tuition programs take a small upfront fee, but most defer all tuition until you graduate and find a job.
Once you find a job, you’ll pay a fixed amount of tuition in a series of installments.
What is an Income Share Agreement?
Income Share Agreements (ISAs) allow you to pay for your education in exchange for a percentage of your future income. Instead of paying upfront, you’ll only pay once you graduate and find a job that pays you over a certain amount of money.
ISAs typically last between one and four years, during which time you’ll pay a certain percentage of your income to the school. But, in order to make a payment, you need to earn over a certain amount. If you don’t earn over a certain amount after finding a job, you will not be required to make payments toward an ISA.
What Are the Benefits of Deferred Tuition and ISAs?
One of the most important benefits of deferred tuition and ISAs is that they align the incentives of a school with their students. This is because, under these agreements, a school will only get paid if their students succeed and find a job; if a student does not find a job that pays them well, the school will earn nothing or very little, from the student.
In addition, ISAs and deferred tuition take the pressure off students to finance their education upfront.
You don’t need to worry about finding tens of thousands of dollars to pay for your education upfront or think about taking out a loan which will accrue interest for the duration of the loan. Instead, you can focus on your education, and only pay when you succeed.
Another benefit of deferred tuition and ISAs is that they offer an alternative to debt for people who are unable, or unwilling, to access debt-based financing options.
Because bootcamps are not Title IV eligible, federal student aid is not available to bootcamp students. This leaves people who would depend on loans with only private-market providers to rely on, which many people cannot access, or are unwilling to raise money from. ISAs and deferred tuition offer two viable alternatives for students underserved by debt models.
What You Should Look Out For
You may be thinking: “This sounds great! Under an ISA or deferred tuition, I’ll only have to pay if I succeed!” While this is true, there are a few things that you should look out for when evaluating a deferred tuition or ISA program, to make sure that you enter into an agreement on favorable terms that meet your financial needs and long-term career ambitions.
Here are a few questions you should ask yourself when evaluating an ISA or deferred tuition program, to help ensure you get a good deal:
Do you need to earn a minimum salary before you start paying tuition?
Most ISAs require you to earn over a certain salary—called a “minimum income threshold”—before you are asked to start making payments. This is often the case in deferred tuition agreements, but not always. Make sure you know when your payments would start, to ensure that you understand exactly what triggers a payment.
What limits are in place to protect you from paying too much?
ISAs and deferred tuition agreements usually both have term limits which state that, after a certain number of months or years, your agreement will expire and you will be under no obligation to make any payments. Make sure you know when this limit kicks in.
You should also ask whether there is a cap on how much you need to pay back. Do you keep making payments until your agreement is over? Or does your agreement automatically expire when you make a certain number of payments, or pay a certain amount?
What happens if you do not find a job?
In most ISAs and deferred tuition agreements, if you do not find a job, you’ll pay nothing. With that said, many agreements have deferment clauses, which are represented as a number of months during which you can pay nothing before the term of an ISA reduces.
So, if your ISA has a two-year term and a three-year deferment, if you are not employed the three-year deferment will decrease every month, then, if you are still not employed, the two-year term will decrease. You need to be aware of how this works under your ISA, if such a mechanism is used.
Pro Tip: Evaluate All Your Options
Above all else, you should make sure that you evaluate all the options available to you and consider the long-term payment obligations to which you would be bound under all options.
For instance, you may want to contact a bootcamp about their loan, upfront payment, and ISA options, then perform a side-by-side comparison to see which option makes sense and under which circumstances.
If you are confident in a bootcamp, for example, a loan may make sense. But, if you are debt-averse, an ISA or deferred tuition agreement may offer more favorable payment terms based on your personal risk parameters.
How are ISAs and Deferred Tuition Regulated?
Both ISAs and deferred tuition are not bound by any specific regulations.
In July 2019, the ISA Student Protection Act was proposed in the U.S. Congress, which would create a series of guardrails around ISAs. Among them included a national minimum income threshold—set to 200% of the Federal Poverty Level—as well as restrictions around consumer protections and borrower disclosures.
However, this legislation has not yet advanced to a vote and has not been passed, and so at the moment, its restrictions do not apply to ISAs.
With that said, most schools offering ISAs and deferred tuition have worked hard to maintain a set of principles to ensure their programs adequately protect students.
For instance, most ISAs institute reasonable term limits, and strong minimum income thresholds, to ensure students are not bound to an agreement for too long or are asked to pay too much. To give you an example, most bootcamps use income-share percentages that are no higher than 20% and include terms that do not exceed eight years if you do not make any payments toward your contract.
Which Bootcamps Offer Deferred Tuition Agreements?
There are a number of coding bootcamps that offer deferred tuition as a method of payment to their students. These include:
App Academy is a web development bootcamp that prepares you to enter a career using Ruby on Rails. To finance your education, you can either:
- Pay the full tuition upfront
- Pay a $5,000 deposit, and pay $23,000 across the space of a year once you find a job
- Pay a $9,000 down payment before the course, and pay $14,000 across the space of a year once you find a job
Hackbright Academy is a project-based software engineering coding bootcamp for women. The bootcamp, based in San Francisco, offers students both full-time and part-time programs in computer science and web development. To finance your education, you can either:
- Pay the full tuition upfront
- Pay $2,899 on enrollment, then pay $16,895 when you land a job, divided among a certain number of payments
- Finance your education with a loan
- Pay the full tuition upfront
- Pay a $1,000 deposit, then pay back 17% of your salary for a maximum of two years, but only if you find a job that pays at least $60,000 per year.
There are a few other coding bootcamps that offer deferred tuition agreements. These include:
- Flatiron School Access Labs
- Nashville Software School
- The Grace Hopper Program
Which Bootcamps Offer Income Share Agreements?
There is a wide range of coding bootcamps that offer Income Share Agreements as a method of education financing.
The below table summarizes the terms used by five coding bootcamps which offer ISAs as a method of payment.
|School Name||Term (months)||Income Share (%)||Payment Cap||Minimum Salary|
Payment cap is represented as a multiple of the initial tuition cost for a program.
A few other coding bootcamps that offer ISAs include:
What Are the Alternatives?
As we mentioned at the start of this article, there are more options than just ISAs and deferred tuition out there. These options include the following:
- Scholarships. Many bootcamps offer scholarships to students who meet a certain set of criteria. These scholarships are typically offered to veterans, people from underrepresented groups, or on an as-needed basis.
- GI Bill. Benefits offered under GI Bill can be used to finance your education at a number of eligible bootcamps if you have served in the military for a certain amount of time.
- Loans. Loans, which are made available through companies like Climb Credit and Ascent Funding, allow you to borrow the money you need to attend bootcamp.
The Bottom Line
In summary, deferred tuition and Income Share Agreements are both popular methods of financing one’s education. While these payment methods may be newer than others, they are constituting an ever-increasing number of financing arrangements at coding bootcamps.
If you are unable to save up the money you need to pay for a bootcamp upfront, or if you do not want to take out a loan, then deferred tuition and ISAs are great options for you. Taking out an ISA or deferred tuition agreement can also help you feel more confident in your education, because you’ll only be liable to make payments if you succeed.
With that said, there are drawbacks to these methods of financing. Under many ISAs and deferred tuition agreements, you may end up paying more than you would through a loan. This is often the case with ISAs if you earn a very high salary after graduation, because what you pay under an ISA is income-contingent. In addition, if you’re not looking to transition to a career in tech, an ISA or deferred tuition arrangement may not be a good option.