Deferred Tuition and ISAs: A SwitchUp Guide
Software engineering and other types of bootcamps can be costly. Bootcamp providers understand that many people simply can't afford to pay the full tuition fee right up front. They also appreciate that some prospective students may be reluctant to enroll without some sort of guarantee that they'll graduate with marketable skills that will lead to a tech job. To address these issues, schools may offer free coding courses to give you a taste of what you'll learn, and they may also offer scholarships and accept GI Bill® benefits from veterans returning to school.
Additionally, many bootcamp schools offer payment plans that allow you to postpone paying your tuition fees until after you've completed the course and possibly found a job. The two most common tuition options are deferred tuition and income-share agreements (ISAs). Make sure you understand the pros and cons of these payment plans before signing on the dotted line.
What Is Deferred Tuition?
On a deferred tuition payment plan, you'll agree to start making monthly payments at some point after completing the bootcamp. This could be immediately after graduation, a few months later, or whenever you find a job that meets an agreed-upon minimum salary, usually $40,000 a year. The number of months that you'll be required to pay varies depending on the tuition amount and school.
Although this type of payment plan may allow you to obtain essential training, you should keep in mind that deferred tuition coding bootcamps often cost more than if you'd paid in full at the beginning. In fact, you could pay as much as one and a half times the original tuition fee. Much like a student loan, however, a deferred tuition payment plan may be worth it if it gets you to your career goal.
What Are Income-Share Agreements?
Income-share agreements are similar to deferred tuition plans in that they allow you to postpone payments until after you've finished the bootcamp. However, rather than paying monthly installments based on the bootcamp tuition fee, with ISAs, your monthly installments are a percentage of your income.
Generally speaking, ISA payments kick in as soon as you find a job — any job, not necessarily a tech job — that meets a salary threshold. This threshold may be $40,000, but some schools have set theirs at $50,000 or higher. Your monthly payments may be as much as 15% of your income, and the amount may be adjusted as your salary increases. The number of months you'll need to pay is often 36-48 months.
Even though ISA coding bootcamps frequently set caps on either the number of payments or the total amount to be paid, you can see how using an ISA could lead to a much higher cost than the original tuition fee. Here again, however, an ISA bootcamp can be a viable option to pay for the training you need.
Why Choose Deferred Tuition or ISAs?
For many prospective students, ISA and deferred tuition coding bootcamps can open doors to a new career that would otherwise remain closed. These alternative tuition options are ideal for those who don't have enough money in savings to pay tuition up front, don't qualify for a personal loan, or simply have other financial obligations that prevent them from paying the tuition fee in full. Alternative payment plans may allow you to begin your journey for free or with a nominal deposit.
Another benefit to postponing payment, especially if you choose an income-share agreement bootcamp, is that the schools become highly motivated to assist you in landing a job after graduation. Like coding bootcamps that offer job guarantees, ISA bootcamp providers don't get paid until you go to work, preferably in a relevant tech job like software engineer or web developer. It's also in their best interest to help you get the highest salary possible.
Also, some bootcamps that offer deferred tuition or ISAs have clauses that release you from paying off your debt if you can't find a job in a certain amount of time, usually 12-18 months.
Learn more about payment options with our guide to paying for your coding bootcamp.
Read the Fine Print
Although deferred tuition and ISA bootcamps offer a significant advantage, there are some potential drawbacks as well. Perhaps the most important consideration is the higher amount you'll probably end up paying by deferring tuition or entering into an ISA. You may want to create a budget to better understand how one of these options could affect your future finances.
Deferred tuition ROI is a bit easier to calculate than ISA ROI. Deferred tuition bootcamps generally spell out exactly how much interest they may charge, how many payments you'll make, and the total amount you'll pay. You can then evaluate this option in light of your income potential and other financial circumstances. ISA ROI is a bit more challenging because you don't know what the future income of your new job will be.
As you can see, it's essential for you to thoroughly understand each school's terms before you enroll. If you're not clear on the details of each payment plan, you can contact the school to discuss your options prior to signing a contract. Some of the questions you may want to ask include:
- Do I need to be earning a certain amount before I start repayment?
- Will my payment amounts increase if I get a raise?
- Are payments delayed until I find a full-time position in the tech industry, or do they begin if I find any job, including freelance or contract work?
- Is the repayment for a set amount or a set period of time? What caps have been established?
- If I don't land a full-time position within a certain period of time, will the fees be waived?
- What happens if I don't complete the bootcamp program?
Do I need to qualify and apply for a loan with the coding bootcamp's loan partner?
Finally, remember that these are not your only options. If you have good credit, you may qualify for a personal loan that offers better repayment options than either of these payment plans. Many schools also have a financial lender partner, such as Ascent or Climb, that is willing to make personal loans for bootcamp tuition.
Wondering which bootcamps are right for your needs? Review our ranked list of the best coding bootcamps.
Coding Bootcamps with Deferred Tuition or Income-Share Agreements
Deferred Tuition and ISA FAQs
Is Deferred Tuition Worth It?
Yes, for some people, deferred tuition is definitely worth it. A deferred tuition bootcamp may be the best choice for you if you can't afford to pay the full tuition cost upfront and can't qualify for a personal loan. Although you may ultimately pay more for your bootcamp than the original tuition fee, it may be the best way to acquire new skills and get started on a tech career.
How Do ISAs Work?
Like deferred tuition, an income-share agreement enables you to postpone paying for your bootcamp until after you've completed the course. If you agree to an ISA, you'll be required to start making payments as soon as you land a job with a minimum salary, such as $40,000. Your monthly payments will be a percentage of your income — as high as 15% — which means that the payment amount could increase as your salary increases. You'll most likely be required to make monthly payments for several years until you've met some kind of cap, such as the total amount paid or the total number of payments.
Are Income-Share Agreements Taxable?
No, income-share agreements are not taxable. Technically, an ISA does not include interest, so the IRS does not consider ISA payments to be tax deductible.
How Do I Get Out of an Income-Share Agreement?
Since an ISA is a legal, binding contract with either a school or its lending partner, you are generally required to pay off your financial obligation by either completing the agreed-upon payments, paying out the full amount of the repayment cap, or making the required number of payments. The exact process should be included in your ISA contract.
However, there may be instances where you feel that the bootcamp school or lender has breached its contractual obligations to you in some way. In this situation, you should consult a consumer protection attorney to determine if you have a case for legally refusing to pay off the ISA. The attorney will let you know what legal recourse you have, if any, and can assist you in terminating the contract.
GI Bill® is a registered trademark of the U.S. Department of Veterans Affairs (VA). More information about education benefits offered by VA is available at the official U.S. government Web site at https://www.benefits.va.gov/gibill.