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A Model for Post-Secondary Education Income Share Agreements Based on Blockchain Smart Contracts

Updated: Sep 12, 2019

An income share agreement, or ISA, is a financial contract where a sponsor provides a fixed amount of money or valuable services to a recipient who, in exchange, agrees to pay back a percentage of his/her income over an agreed upon period of time. A post-secondary education ISA is specifically used by students to obtain 2-year associate, 4-year undergraduate, advanced graduate degree, or vocational education services. In recent years, pioneering universities have begun to pilot ISA offerings (Purdue University’s “Back a Boiler” program) to their student body, while novel for-profit vocational schools (App Academy) and private finance companies (Align Income Share Funding, Education Equity Inc.) leverage ISAs as a central pillar of their business model.

This paper introduces Picotte, an original, structured framework for post-secondary education ISAs designed to: 1) help students understand the potentially complex ramifications entering into such contracts can have on their post-graduate careers and personal lives,2) strike the appropriate balance between protecting student interests and incentivizing money providers, 3) address the potentially high cost of administration associated with ISAs, and 4) facilitate the general acceptance and adoption of ISAs in the United States given the national political context.

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