Through Invest in U, the University of Utah is investing in its students’ success, recognizing that many students start and stop their educations based on finances and workforce conditions. This pilot program is designed to fill funding gaps and enable students to stay enrolled so they can finish their degrees faster and begin capitalizing on their earning potential sooner.
ISAs are flexible, innovative funding tools that provide students an alternative to traditional educational loans and other payment mechanisms. ISAs adapt to life changes and do not add to debt burden. While student loans are based on a principal amount and accrue interest, ISAs are based on a student’s future income. Debt incurred through most student loans may create substantial risks to students if they cannot afford their payments during and after college, whereas ISA payments adjust according to levels of income. This ISA program is specifically designed to fill funding gaps so students can enroll full time, complete their degrees faster, and begin earning sooner. ISA payments go back into the Invest in U fund to help future students.
In the initial pilot phase in 2019, we picked a select number of majors across a variety of schools/colleges. In April 2020, we expanded the program to juniors as well as seniors and to all majors due to economic uncertainty caused by the coronavirus pandemic.
There are five key contract terms in an ISA:
Income share: percentage of monthly income a student agrees to pay.
Payment term: maximum number of monthly payments required to fulfill ISA obligation.
Minimum Income threshold: income below which payments are paused.
Payment window: maximum time window for the ISA. If your ISA is in good standing, the obligation ends when the payment window is over even if you’ve paid less than the initial funding amount.
Payment cap: maximum amount a student can be obligated to pay; expressed as a multiple of the ISA amount.
The pilot program is available to students in all majors who are within two years of graduating. Eligibility requirements include:
- Undergraduate student at the University of Utah pursuing a first bachelor's degree
- Must be within 64 hours of completing a degree
- U.S. citizen or permanent resident
- 18 years or older at time of contract execution
- Meet Satisfactory Academic Progress (SAP) toward degree as defined by the University of Utah
- We encourage students to enroll full time
- Cannot have unresolved default on federal student loans
If you are interested in participating in Invest in U, be sure to review information here. Once you are ready to start the process, complete the Initial Acknowledgment Form and email it to email@example.com, or schedule an appointment with a financial aid counselor who can help explain all funding options, including the ISA. Contact by email at firstname.lastname@example.org or by phone at 801-581-6211 to schedule an appointment.
In the pilot phase of Invest in U, undergraduate students in all majors who are within 64 hours of completing a degree are eligible to receive $3,000 to $10,000 in ISA funding. A student may receive up to two ISAs each year—one for the fall/spring academic term and one for the summer term. ISAs can be used to fill funding gaps after any grants and scholarships are awarded.
The Invest in U program offers ISAs throughout the academic year—fall, spring and summer semesters.
Each ISA contract is formed independently, so term lengths and income shares may vary. Students will pay the obligations concurrently. For example, let’s say a student uses two ISAs, and each has a 2.4 percent income share and 72-month payment term. The student may pay those two obligations at the same time, meaning the student would pay a 4.8 percent income share for 72 months, or pay them consecutively, over 144 months, at 2.4 percent of income.
Yes, the Invest in U program has a customized option for students wanting to complete their ISA obligation early. Students may fulfill their ISA obligation for a reduced amount in the first 12 to 24 months. See contract or contact Financial Aid for more details. If you have more questions, see the section below titled "Fulfilling an ISA contract."
How does an ISA compare to other financial aid options?
Both ISAs and loans are a way to pay for educational expenses without upfront costs.
- An ISA payment obligation is based on income and there is no principal balance or interest. With an ISA, students pay a percentage of their monthly income for a fixed number of months. In comparison, a traditional loan payment is based on a principal amount borrowed, accruing interest and fees, regardless of your earned income. With a loan, students repay a set amount that is based on the principal balance, interest and fees, and the payment window can be extended.
- ISA payments self-adjust by income level and therefore, by design, are affordable according to your income. With loans, payments remain the same even if income goes down or is lower than expected, exposing students to the risk of being unable to make loan payments.
- When earnings are below a certain threshold (i.e., monthly income of $1,667, annual salary of $20,000), no ISA payment is due. Payments are suspended until income surpasses $20,000. With a loan, interest usually accrues and the future financial burden increases for each month a borrower is unable to make payments. With some loans, a borrower may still be required to make payments even when income is low.
The Invest in U ISA program offers an additional option outside of traditional student loans that can be used to pay for an education. Because an ISA relies on an income-flexible payment rate and the term is set for a number of required months, it may provide a useful alternative to other student loans. The Invest in U comparison tool can assist in comparing an ISA with other educational funding options.
The ISA is treated the same way as a private loan. The maximum ISA you can be awarded would be your cost of attendance minus other financial assistance. Grants, scholarships and other need-based aid would not be reduced by the ISA. Students will have the option to pursue additional student and/or parent loans if desired.
The Invest in U ISA fund provides another funding option for students who do not want to incur traditional debt from student loans. An ISA can reduce debt and financial risk for graduating students.
Fulfilling an ISA Contract
Your payment obligation ends—and your account is closed in good standing—whenever the first of any of the following events occurs:
- You make the required number of payments, regardless of the original amount of aid.
- You reach the term end as outlined in your ISA.
- You hit the payment cap of two times (2x) the amount received.
An ISA recipient is required to pay the agreed upon percentage of income for the payment term of the contract. After making successful payments over that term, no additional payments are required even if the payment amount is less than the funding received.
Students will never pay more than two times the amount of ISA funding. Once a student makes the required number of payments, fulfills the maximum payment window, or reaches the payment cap of two times the amount received, no more payments are required.
You will have met your obligation under the contract and your account will be closed in good standing.
Yes, the Invest in U program has a customized option for students wanting to complete their ISA obligation early. Students may fulfill their ISA obligation early in the first 12 to 24 months for a reduced amount. See your contract or contact Financial Aid for more details.
No. One way that an ISA differs from a loan is that students do not accrue interest on the total amount funded. ISAs do not have a principal balance and accruing interest.
Payments are calculated by applying your income share to your monthly income. For example, let’s say a student has an ISA with an income share of 2.85 percent for 60 months, and this student gets a job earning $48,000 per year. A student’s payments would be calculated using these steps:
- Calculate monthly income by dividing annual income by 12: $48,000/12 = $4,000
- Calculate monthly payment by multiplying the monthly income times the agreed upon income share: $4,000 x 2.85 percent = $114/month.
As the student’s income changes, payments will always be calculated using the same formula.
After you graduate or otherwise separate from school, your account enters a six-month grace period to give you time to find a job and settle into your career. You will begin making payments based on income earned in the month following the end of your grace period. For example, if you graduate on May 15, your grace period will run from June 1-November 30. If your earned income is above the monthly income threshold in December, your first payment will be due in January.
Please refer to the following table for payment options if you are not employed full time or are not earning $20,000 a year or more.
Your account will be placed into a paused status and you will not make payments if you:
- Are enrolled at least half time (as defined by your institution) in higher education or training and are maintaining satisfactory academic progress in the program
- Are employed and earning less than $1,666.67 monthly (equivalent to an annual earned income of $20,000)
- Are unemployed (not working but actively seeking employment; for instance, taking time off due to illness or to care for a child, relative or spouse)
- Are engaged in full-time voluntary service (e.g. religious mission or military service).
In general, students will make up the missed payments once their income is back above the minimum income threshold. Additional details are provided in the Income Share Agreement contract.
You are required to inform us whenever your income changes, whether it is an increase or a decrease. Every April, the program will reconcile your monthly payments with your verifiable annual income, through a tax return from the previous year. If you paid less than you were supposed to, the discrepancy in payments will be made up over the remainder of the year. If you paid more than you were supposed to, the university will apply the excess payment to future payments.
Things to Consider
An ISA is one option for education funding. Students should carefully consider all financial aid options, meet with a financial aid counselor and study this website and the comparison tool to determine what type of financial aid is best for them.
What makes an ISA different is that the payments are flexible and based on monthly income. Because payments are always a percentage of income rather than a fixed dollar amount, the payment structure is flexible when life circumstances change and in times of economic difficulty. Your payments may be paused if your full time income drops below $20,000 per year (equivalent to $1,666.67 per month), if you go back to school full time, engage in full time voluntary service or other qualified life events. Additionally, once you have successfully made the required number of payments over the defined contract term, the obligation ends, even if the total sum of payments is less than the ISA amount initially received.
While in school, whether at the University of Utah or any other accredited university, your ISA will be paused (similar to in-school deferment) and retain that status until six months after you graduate or separate from the institution. Your ISA payment term will be extended by the amount of time you are in school.
Failure to communicate your income: If you fail to communicate your annual income or experience difficulty making payments, then your account may become delinquent and eventually go into default. This can be avoided by maintaining communication and complying with the terms of your ISA contract.
Students earning higher than average salaries: If you earn significantly more than the average salary for your major, you may pay more than others in the program, but never more than the 2x payment cap (e.g. you have $3,000 ISA, your payment cap would be $6,000). Conversely, should you earn less than your peers, you would pay less. Please consult the ISA comparison tool to see what the average and range of payments are for each major.
No, there are no requirements stipulating the nature or type of employment or re-enrollment in school that you can choose after you leave the institution.
If you leave prior to incurring any University of Utah charges, the ISA contract will be canceled and you will not owe any payments. If you leave after the 100 percent refund period, your contract amount will be adjusted based upon our stated university refund policy. Students needing more information about the refund policy should meet with their financial aid counselor.
ISA contracts enter a grace period upon graduation, separation or when a student is taking less than a full-time credit load. Even if you don’t finish your degree or program, you are responsible for meeting the terms of your ISA contract.
ISAs are not currently reported on a 1098 T.
The federal, state and local income tax consequences of ISAs are not yet certain. Upon the maturity or termination of an ISA, if the aggregate amount of funding credited to your account is greater than the sum of payments you made during the payment obligation, you may need to recognize the difference as ordinary income. We recommend you consult with a trusted advisor about the consequences of entering an ISA.