Income Share Agreements vs. Student Loans: Which Costs Less?

Estimate your future salary to determine if an ISA will cost less than a student loan.

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

Income share agreements, or ISAs, are not student loans. But ISAs can make sense as an alternative to some types of student loans — if they'll cost you less overall.

It's easy to calculate traditional student loan payments based on a loan's terms. But ISA payments depend on your post-college income. Because you can't know that specific number, it can be hard to tell how an ISA stacks up vs. a student loan.

NerdWallet looked at three scenarios to determine how different compare with federal PLUS and private student loans. Here's what we found, as well as tips and a calculator to perform your own analysis.


To find out how much different earners would pay on a $20,000 ISA over a 10-year repayment term, we looked at three income levels — $38,000, $52,000 and $75,000. These are approximate representations of low, middle and high incomes.

We assumed each income would increase 4% annually, and used three income share percentages: 3%, 5% and 10%. Here's how they compared:

You won't always repay more than the amount you received with an ISA, but you're likely to if you’re a higher earner or have higher percentage terms.

For example, say you get a $20,000 ISA and agree to pay 10% of your income over a 10-year term. If you earn an annual income of about $75,000, you could pay back nearly $90,000; however, there’s usually a cap on the amount you can repay — don't agree to an ISA without a payment cap.

If you earned about $52,000, you'd still pay back more than your financing amount at a 5% or 10% income share. The only time you'd pay less than the original $20,000 would be if you had a small income share (3%) and relatively little income — $13,687 for a $38,000 earner and $18,730 for a $52,000 earner.


ISAs should supplement undergraduate federal loans, not replace them. We compared our ISA findings with two common additional : federal PLUS loans and private loans.

First we looked at a $20,000 PLUS loan with an APR of 7%, repaid over 10 years. Then we considered a private loan of $20,000 with an APR of 9% with that same repayment period.

We also wanted to see how ISAs compared with , since that can reduce private loan debt. We looked at how much a borrower would spend after refinancing a $20,000 private loan to a 5% APR and new standard 10-year term after two years of regular payments.

Here's how much each would cost:

In this example, an ISA is a less expensive option than PLUS, private or refinanced loans if you'll be a high earner — as long as you only have to pay back 3% of your income. ISAs are also cheaper if you project to earn an income of about $38,000, but only if you have payback terms of 3% or 5% of future income.

However, if you're projected to make less money, you're less likely to get these favorable, low-percentage ISA terms.

Unless you have a time machine, there’s no way to know decisively whether an ISA will cost you less than a student loan. If you crave certainty, stick with the loan and look to to save money.

If you're not sure if an , do the following to estimate your post-graduation salary so you can figure out how might you might pay overall:


Because ISAs don't charge traditional interest — and thus, don't have an interest rate — it can be hard to compare them with student loans. The ISA calculator below will provide an interest rate based on your information.

Use this calculator once you've estimated your post-grad salary and determined to estimate how much you'll repay overall.

On a similar note...
Dive even deeper in Student Loans