V School, a vocational school in Salt Lake City that teaches students code and design, has received $1 million in funding from edly, an innovative online financial platform that offers an alternative to student loans through income share agreements (ISA). This innovative financial product gives investor money to top schools which is repaid based on a share of the future income of the student.
Students who participate in ISA programs accept a loan from the school that they will pay back after graduation. In addition to the payback being based on income, other features of ISAs include no accrued interest and the total amount of payments over the term capped at about1.5 times the amount of tuition.
ISA providers require schools to align their financial incentives with students and investors. This “skin in the game” includes financial incentives to graduate students that help them find good jobs. For this reason, career-focused schools are a good match for ISA programs. In fact, many schools use ISAs as a way to signal to students that they are willing to invest in them.
In the case of V School, where the graduation rate is 88% and the median salary for 2019 graduates is $72,000, students receive a marketable education that ensures they can afford paying back the loan post-graduation. Investors know they are helping the next generation of students when a high-performing school like V School is in the program. Also, the program is very helpful to many female and veteran students who then enter the tech industry with a stable job.
“Access to liquidity via the edly ISA marketplace allows us to scale V School’s impact and provide a pathway to a great career and life to even more students,” said V School CEO Michael Zaro. “We’re proud of the support from our partners at edly and look forward to creating better opportunities for students together.”
