Considering an income share agreement (ISA) to finance your college education?
Stride Funding offers a compelling alternative to traditional student loans, providing a flexible and supportive approach to funding your studies.
If you’re curious about whether a Stride ISA is the right fit for you, let’s delve deeper into what they offer.
What exactly is an ISA?
ISAs represent a departure from conventional student loans, offering students a means to finance their education with a unique twist. Unlike traditional loans with fixed interest rates, ISAs involve borrowing money with a fixed percentage of your future income.
Here’s how it works
When you opt for an income share agreement, you commit to repaying a small, fixed percentage of your future earnings over a predefined period following graduation. In Stride’s case, this repayment period spans five years. This arrangement means that individuals securing lower-paying jobs post-graduation will end up repaying less than their higher-earning counterparts over the same timeframe.
Moreover, many ISAs, including those offered by Stride Funding, incorporate provisions that waive repayment obligations for individuals unable to secure employment above a certain income threshold. This feature alleviates some of the financial pressure on recent graduates, ensuring that repayment terms align more closely with their evolving financial circumstances.
Also read Reviewing Verto Education: A Seamless Study Abroad Experience
How is my ISA rate determined?
ISA providers calculate their rates based on the financial prospects of the degree program you’re pursuing. Programs that typically lead to higher-paying careers often come with lower rates, while those with less lucrative outcomes may entail higher rates.
How does an ISA differ from student loans?
With an ISA, borrowers agree to repay a fixed percentage of their salary over a specified number of years after graduation. In contrast, student loans require borrowers to repay the borrowed amount plus accrued interest, usually at a fixed monthly rate. While student loan borrowers can adjust their monthly payments based on income, they cannot alter the principal amount owed.
What does this mean for you? The key distinction lies in the flexibility of repayment. ISA repayment terms tend to be more forgiving compared to student loans. If a student loan borrower lands a lower-paying job, they may reduce their monthly payments, but accruing interest may result in higher overall repayment amounts. In contrast, ISA borrowers automatically benefit from lower monthly payments, potentially paying back less overall.
However, it’s essential to recognize that this dynamic can work both ways. ISA holders securing high-paying positions may end up repaying more than if they had opted for student loans. Since ISAs entail a fixed percentage of income, higher earnings translate to higher repayment amounts.
Also see 5 Strategies to Attend College for Free
How does a Stride Funding ISA work?
How much can you take out?
Stride Funding allows students to borrow up to $25,000 per academic year. However, you also have the option to borrow a lesser amount and combine it with student loans if needed.
How long do you have to make ISA payments?
Upon graduation, you’ll enjoy a three-month grace period with no repayments. Afterward, you’ll enter a five-year repayment period. Periods of unemployment or underemployment during this time won’t count toward your repayment period, extending it until you’ve completed 60 months of repayments.
What percentage of my income will I have to repay?
Stride’s ISA rates range between 2% and 9.5%, depending on factors like your school and major. You can determine your rate using Stride’s quote tool, helping you understand the percentage of your income you’ll repay monthly over the five-year period.
Is there a limit to the amount I’ll have to repay?
While landing a high-paying job is ideal, it could lead to repaying more than you borrowed. Stride’s ISA includes a provision where you’re released from your obligation after repaying double the principal amount borrowed.
What income qualifies for suspended payments?
Graduates earning below $40,000 annually (or $3,333 per month) are exempt from payments, known as the “minimum income threshold.” However, these periods of suspended payments don’t count toward your repayment period.
Will my credit score qualify me for a Stride ISA?
Stride considers credit scores but is accustomed to applicants with limited credit history. Barring significant credit issues, approval chances are high.
Who qualifies for a Stride Funding ISA?
Stride ISAs cater to students nearing graduation in specific majors. Eligible undergraduate students include:
- Junior & Senior Bachelor students majoring in Engineering, Computer Science, STEM fields, and Nursing. Nursing programs may include RN/BSN and Bachelor’s (Juniors & Seniors), as well as those pursuing a second Bachelor’s degree.
Graduate/Masters students are eligible if their focus is in:
- STEM fields: Mechanical Engineering, Information Technology (IT), Industrial Engineering, Computer Science, Civil Engineering, Chemistry, Biomedical, Biostatistics, Biomedical Engineering, Biomedical Sciences, Biology, and Data Science.
- Healthcare: Physician Assistant, Physical Therapy, Healthcare Administration, Occupational Therapy, Pharmacy, Health Informatics, Medical Dosimetry, Nursing (RN/BSN/MSN/DNP – Graduate or 2nd Bachelor).
- Business: Masters of Accounting, Masters of Finance, and MBA programs.
What sets Stride apart?
Stride operates on a unique model compared to many other ISA providers. In the realm of Income Share Agreements, most opportunities are typically available on a school-by-school basis. Each institution either provides its own ISA or collaborates with an organization to offer one. Stride, however, extends ISAs to students from various schools.
The broad reach of Stride’s program could enhance the effectiveness of its job placement and career assistance services. With ISAs available to students nationwide, Stride likely boasts a larger network of connections, potentially offering students more diverse and robust career opportunities.
Also see Coursera Scholarships and Financial Aid: A Guide
Comparing Stride Funding ISA to student loans
Ultimately, whether you should opt for a Stride ISA or traditional student loans hinges on several factors:
- Principal Repayment: Consider the total amount you’ll repay over the term of the agreement.
- Repayment Flexibility: Evaluate the flexibility of your repayment schedule and any provisions for adjustments based on your income.
- Credit History: Assess your credit history, as this can impact your eligibility for different financing options.
- Need for a Cosigner: Determine whether you require a cosigner for your loan application.
Here’s a breakdown of the pros and cons of Stride ISAs:
Pros:
- Shorter Duration: Typically around 5 years compared to traditional loans, which often extend beyond a decade.
- Payment Cap: The repayment amount is capped at double the borrowed sum.
- Interest-Free: Unlike traditional loans, there’s no accruing interest or interest payments owed.
- Grace Period: Offers a grace period and automatic deferral during unemployment or when earning below the minimum income threshold.
- No Cosigner Needed: Unlike many private loans, Stride ISAs don’t require a cosigner.
- Transparent Fees: There are no hidden fees, common in some private student loans.
Cons:
- Income-Linked Repayment: Your repayment amount increases with higher income, potentially resulting in higher total repayment.
- Lack of Loan Forgiveness: ISAs aren’t eligible for student loan forgiveness programs.
- Limited Availability: Not widely accessible outside select majors and programs.
- No Early Repayment Incentives: Stride offers no discounts for early repayment of ISAs.
Ultimately, weigh these factors carefully to determine which financing option aligns best with your financial circumstances and goals.
Conclusion
Stride Funding is revolutionizing the ISA landscape by extending its accessibility to a broader audience. This innovative financing model offers an enticing alternative to traditional student loans, circumventing some of their inherent drawbacks. Qualifying for a Stride ISA, or any ISA variant, warrants serious consideration as part of your education financing strategy.
While prioritizing scholarships and financial aid remains paramount, exploring options like a Stride ISA could prove more financially prudent than resorting to private student loans to bridge funding gaps in your education journey.