A New Way to Pay for Nursing School: Income Share Agreements (ISAs)

Can you remember the moment you decided to become a nurse? Was it an early interest in science, or simply a desire to help people? Who was your inspiration? Despite the industry’s great job outlook, one obstacle still exists for many aspiring nurses and nursing students: how to pay for school!

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A New Way to Pay for Nursing School: Income Share Agreements (ISAs)

The Current State of Nursing School and Student Debt

In 2018, nursing students graduated with an average of $30,000 in nursing school loans, on top of an average of $30,000 of undergraduate debt. Nationally, this is part of a $1.6 trillion student debt bubble leaving young people paying off their education for 20+ years at the cost of important life milestones and their financial futures.

People choose to become a nurse to help save lives, not to get saddled by life-long debt! Luckily, it doesn’t need to be this way thanks to an education funding model called an Income Share Agreement (ISA) that offers a way to limit payments to what graduates can afford at each point in their lives.

What are ISAs?

ISAs are agreements in which a student receives an upfront payment for tuition in return for paying a fixed percentage of their future income for a set number of years. To further protect against risk, they also feature minimum income thresholds before payment expectations kick in (usually around $30-$40k per year), as well as caps on the maximum amount that can be repaid.

Beyond expanding access to programs, the model aligns students’ interests with ISA providers’. After all, these providers only succeed if their students do—a fact reflected by the member perks and career-coaching packages offered to customers for free.

ISAs vs. Loans

This appeal over traditional loans only becomes clearer when comparing the models more closely. While federal loans break down into Stafford and Grad PLUS options, Stafford loans are capped at $138,500 for both graduate and undergraduate schooling, and Grad PLUS loans require credit checks that could force young people with bad credit history or low income to find a co-signer—something Stride Funding’s ISAs never require.

Adding to the burden, gaining relief for a federal student loan that one has fallen behind on is not always as easy as one may hope. For instance, in order to qualify for federal loans’ 25-year Extended Repayment Plan, graduates need to already have over $30,000 of outstanding debt, and interest will continue to accrue over the full 25 years under such a plan.

How do ISAs Work for Nursing Students?

Out of a handful of ISA providers, Stride Funding is a standout that focuses on healthcare professionals. Stride offers Income Share Agreements that allow students to finish payments in just 5 years, instead of federal loans’ 10 to 25 years. Their ISAs are also uniquely designed to support nursing career choices, offering webinars, resume workshops, and a community of fellow healthcare students from the moment you sign on. Stride gives unique attention to each ISA applicant to make sure he or she receives both an affordable education and the skills necessary to face the future.

By taking the stress of repayment away with their flexibility, ISAs allow recent grads to focus on their patients and achieving life milestones like buying a car, planning a wedding, or buying a house. Now, nurses have the option to get a degree and focus on what’s truly important—caring for their patients. To learn more about how a Stride ISA can fund your nursing education, visit Stride Funding—you can apply in under a minute!

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This is a sponsored article brought to you by allnurses.com in conjunction with the advertiser. The views expressed in this article are those of the advertiser and do not necessarily reflect allnurses.com, its parent company, or its staff.

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Specializes in NICU.
On 7/21/2020 at 9:44 AM, Stride Funding said:

ISAs are agreements in which a student receives an upfront payment for tuition in return for paying a fixed percentage of their future income for a set number of years.

Instead of a fixed rate loan which has a fixed payment, ISAs are an adjustable rate loan. The more a person earns, the more the company makes. If I had a student loan and worked overtime and got yearly raises, they could pay back the loan sooner. There is no incentive for the person to work overtime if they are giving a chunk of the overtime money to Stride.

On 7/21/2020 at 9:44 AM, Stride Funding said:

as well as caps on the maximum amount that can be repaid.

On another website it states that payments are capped at two times the amount borrowed. For a $25,000 ISA for 5 years, the max. payment is $50,000. Which is a 32% annual percentage rate.

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Hi! Just wanted to clarify some things about the article, since I know it can be a complicated topic!

@ "Instead of a fixed rate loan..." Definitely see where you're coming from, though it might be misleading to call ISAs loans. A loan has a Principal, as well as interest that accrues based on that Principal balance until the loan is fully repaid. For ISAs, there is no interest rate that is adjusted; there is an Income Share percentage that is fixed for the entire duration of the ISA. ISAs fund students even when several uncertainties remain – will they graduate on time, will they find a job immediately after graduation, what would be their likely salary, how would that salary change fluctuate with the economy? For the lucky 5% for whom everything worked out despite the downturn in the economy, a loan might look better, but hindsight is 20/20, and I think one of the features people pay for in an ISA is that security premium. For a student in college, an ISA offers that security and the advantages explained in this article.

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Similarly, @ "On another website it states..." Feel free to correct me (math is sadly not my strong suit!), but if $25,000 grew at 32% for five years, I think the amount owed would be $100,186 instead of the payment cap of $50,000. If the ISA in question were a loan, the interest rate (adjusted for compound interest) would be less than 15%—the highest paid back by the luckiest 5% of students. It seems like they can afford to pay that, though, as the repayment is still a small fraction around 3% of their income.

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Specializes in NICU.

I used a loan amortization calculator. If I was given $25,000 ISA and at the end of 5 years I paid back the $25K plus an additional $25k for a total of $50K the equivalent loan rate would be 32%. You are paying interest on the principal balance each month, not 32% interest on the entire $25k for 5 years. I understand that a max payment is unrealistic for a vast majority of new grads ($117k salary for an 8% ISA) and most new grads would have a far less total interest equivalent (additional money beyond principal).

7 hours ago, jclao said:

Definitely see where you're coming from, though it might be misleading to call ISAs loans. A loan has a Principal, as well as interest that accrues based on that Principal balance until the loan is fully repaid. For ISAs, there is no interest rate that is adjusted; there is an Income Share percentage that is fixed for the entire duration of the ISA.

I understand that it is not a loan does not accrue interest, but you are not giving the student money for nothing (semantics). You are taking a percentage of their gross income for a set number of years. The amount of money that Stride gets is variable depending on the work habits of the nurse. I understand that in certain circumstances, this may be a less costly option for some students, but I would rather take the fixed rate student loan with a fixed repayment plan, that way I control how much the funding company (student loan/ISA company) gets. If I want to work overtime to pay off my student loan quicker and incur less interest, I can do that. With an ISA, you can not say "I am going to work a bunch of overtime to pay off my ISA quicker." It is a set time to pay instead of a set amount to pay.

7 hours ago, jclao said:

If the ISA in question were a loan, the interest rate (adjusted for compound interest) would be less than 15%—the highest paid back by the luckiest 5% of students. It seems like they can afford to pay that,

A new grad nurse in California (high starting wage) would be paying a lot more per month to Stride, in addition to a very high cost of living, than a new grad in rural Ohio (low starting wage) with a low cost of living with the same ISA contract. The California nurse may actually be struggling more despite their higher income. I wouldn't necessarily consider the California nurse lucky.

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I have grave reservations here, especially when the company does a really poor job of concealing itself in a pretend article written by a new account which was then clarified by another new account ala sock puppet style. This doesn't pass the smell test.

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Specializes in Cardiology.

The problem would be solved if federal loans had a 0% or 1-2% interest rate. It's ridiculous the amount of money the federal government makes just off of student loan interest. I pay $530/month towards my loans. If I had 0% or a 1-2% interest they would almost be paid off.

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Hi! I think there's some confusion here about the role of the article—this was a sponsored article by Stride Funding, as originally stated in the header of the story for transparency's sake, and I'm the student intern for Stride who wrote the piece as a way to introduce this new product option. The way I understand it, ISAs as a concept emphasize choice and flexibility in a federal/traditional private funding landscape that's sadly insufficient, and I agree that this choice wouldn't make sense for people who plan on paying off their loan all at once by working overtime. However, if it's a matter of personal choice, an ISA offers consistency and protection for many other people; Stride's packages are also calculated to take into account geography and expected salaries per major, so that should offset any differences in cost of living or industry. Financial products are complicated, though, especially those that deal with protection against losses, and you're definitely welcome to email [email protected] with more questions!

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It seems like a bad deal for those who plan on earning a decent/high salary while obligated to pay.

On 7/21/2020 at 9:44 AM, Stride Funding said:

Stride offers Income Share Agreements that allow students to finish payments in just 5 years, instead of federal loans’ 10 to 25 years.

It's important not to lose track of overall costs when deciding to become indebted/obligated. Specific terms/options like what you have quoted above are less important than the bigger financial picture, IMO. People who are won over by individual offer features sometimes do things like pay tens of thousands more for a single, basic car simply because they liked the size of the monthly payment and ignored the other terms (like length of loan, interest rate).

On 7/21/2020 at 9:44 AM, Stride Funding said:

By taking the stress of repayment away with their flexibility, ISAs allow recent grads to focus on their patients and achieving life milestones like buying a car, planning a wedding, or buying a house. Now, nurses have the option to get a degree and focus on what’s truly important—caring for their patients.

This is kind of pleasant-sounding nonsense. Nurses are capable of focusing on patients and meeting financial obligations...which is good, because your company will expect the obligation to be met if the nurse is in a position to care for patients. I'm pretty sure that your company isn't going to erase the obligation if the working nurse informs you that they would like to buy a house instead of paying you.

I hope one thing you learn at your internship is that plenty of people are capable of recognizing marketing tactics and when those aren't truthful they might just be rejected (along with the company that promotes them).

I've always thought that if a company had an above-board, solid financial product to offer that would be in high demand if people knew the details of it, then the company can also afford to offer basic, ballpark, unofficial and non-obligatory quotes without demanding to collect personal information from those willing to check it out.

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There are better ways to approach this. A company like Stride CAN work for people but you have to understand what you're getting into. You're going to be basically paying more money for someone to force your loan repayment to be budgeted. It's basically saying that no matter what that x% of your income is going to your repayment even after it would have been paid off by then until that 5 years is done.

You can have similar outcomes by just opening a 2nd checking account, putting 10% of your direct deposit into that account, and having an automatic payment set up every month on your student loans. And this lets you still have that money if there's an emergency and you really have to put off a payment for a month and be a little late. But where an ISA can have it's plus side is if you're the type of person who would take that money because you want to go on vacation.

But I still stand by the best possible way to handle school is go the traditional way with loans and grants and then when you're done and start working, make the investment in a financial advisor (even if you don't have student loans to pay back), and have a solid budget put together to cover all your bills, and your loan, and still have money to buy nice things that you want. You're not going to be owning a million dollar house on the beach off of your starting pay as a bedside nurse, but buying a new Corvette in 2 years is actually realistic. And this is from the perspective of being single on one income.

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