How Are Income-Share Models Solving The Problem Of Education Loans For Aspiring Innovators?

Higher education has been a contentious topic in the Indian context for many years thanks to issues such as student reservations, high fees and, particularly these days, the lack of the right job to pay off education loans. Even though education is a necessary expense for young Indians, it has become highly unaffordable for many.

Adding to that is the fact that institutes keep increasing their fees (for tuition, hostel and more) leading to more students opting for education loans. Case in point, the recent distress in students from AIIMS, IIMC and JNU as the institutions increased their course, hostel and mess fees.

While some call education loans as a relief to students for this very reason, that is not the case for many well-deserving students who come from less affluent backgrounds. There are many aspects to education loans that make it hard for these students to get them in the first place, let alone leverage them to get into reputed institutions in the country. This is where the model of Income Share Agreement (ISA) brings an effective solution for universities and students.

There are only a handful of universities and institutions in India with ISA models and that too for short term higher education courses in tech, entrepreneurship and other professional domains. Letting students breathe a sigh of relief from high-interest education loans for its recently launched one-year Innovation programme is MAEER’s MIT ID (MIT Institute of Design). Not only is the programme boosting innovation in young minds and promoting growth and scale, but it is also providing deserving students with ISA to help them enrol and benefit from it.

How Does Income Share Agreement Work?

The rise in the institution’s fees is largely attributed to the struggle that institutions go through to stay up-to-date with global trends and provide comprehensive education and learning to students. Given that higher education costs have continued to rise, there is a great amount of financial pressure on young adults and their families.

An ISA is a contract that helps the student avoid that high price of education and share a certain percentage of their income for a fixed period of time with the institute once they get a stable job. This income sharing clause gets triggered only if the student starts earning within a fixed duration. And if after graduating or completing a programme, they fail to make a certain amount of money, usually, they do not have to pay that portion of their income.

MIT ID ISA For Innovation Programme

“Quality education should not suffer due to the decades of debt aligned with student outcomes. With the Income Share Agreement, we aim to not only give access to quality and affordable education to them but also foster their success,” Harshit Desai, programme head, innovation programme, MITID, told Inc42.

Desai elaborated that the agreement acts as an alternative to education loans, private loans and more and gives deserving students the flexibility to pay back their tuition fees in a set percentage of their post-education salary over a predetermined tenure.

Eligibility Criteria

The eligibility criteria for the innovation programme includes:

• Full-time enrolment to the programme
• He/She should be above 18 years of age when the ISA contract is executed
• Students’ monthly payment obligations under all loan and income share agreements – past, present and anticipated – must not be too large a proportion of his/her anticipated future monthly income, as outlined in ISA Scheme

How Long Do ISAs Last?

The standard payment period of an ISA in MIT ID is about 10 years, making it shorter than most of the private loan terms, pointed out Desai. In addition to that, the institute gives a six-month grace period to students before the payment begins. Once the student completes the payment in the prescribed period of the contract, no additional payments or interests are required.

“With ISA scheme, we give students of all backgrounds the opportunity to complete their education without worrying about their income restrictions. We want our students to be able to focus on their learning during their time at us,” elaborates Desai.

The Benefits Of MIT ID’s Innovation Programme

MIT ID’s innovation programme aims to take students out of their comfort zones and think of innovative solutions to the existing and foreseeable problems. This one-year programme combines design, tech, business and humanities in the form of projects and helps students interact with the industry. The programme includes:

• Access to various courses, workshops, boot camps, research trips and more
• Opportunity to work on projects based on various themes and interact with people from relevant industries
• Continuous guidance and mentorship from stalwarts of the industry
• Ownership of projects and work in teams to deliver impactful and innovative solutions

In addition to that, the institution leverages its connection with tech giants in India, such as Accenture, Microsoft, Deloitte Digital, Mahindra, Saint- Gobain, Tata Group and more to help the students in understanding the industry, connecting with stalwarts as well as for mentorship and placements.

The programme is meant for graduates and professionals from diverse domains and disciplines such as design, engineering, liberal arts or business management.

MIT ID is currently accepting applications for its programme, book your slot now before the seats are full.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.