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Posted on May 4th, 2020 in Eleven Fifty Academy Tags: , ,
12 Questions to Ask BEFORE You Commit to an Income Share Agreement

ISAs are a popular educational funding option, but it’s CRITICAL to understand just what you’re signing up for when talking to a training program. Here are the crucial questions to know the answers to before you consider enrolling.

1.) Is a training program comparably priced with the competition? 

Ask them for written documentation you can keep that shows there are other schools in your  vicinity that charge similar fees for similar training. The problem is that some schools “jack up” their prices in order to make it seem like an ISA is a good deal, but really the charges are hidden in the excessive charges for the education.  Later, the student is stuck paying back exorbitant tuition for an education that could have been had for far less investment.
 

2.) Is this training provider a for-profit or non-profit institution?

For-profit training providers typically charge more expensive tuition with high “effective interest rates” (the same type of rates used for your credit cards). Ask for the “effective APR” in writing from your training provider under the specific scenario of you making an average salary of $70k during the term of the offered ISA. NOTE: Do not let the training provider deflect the discussion. Make them disclose to you what you’ve asked. You have that right.
 

3.) How long does this training program take to complete?

Your time is just as significant an investment as your money.If there are other competing training programs, regardless of whether they are colleges, universities, or bootcamps, it’s important to know WHY spending longer in their training is worth it—especially if  other programs offer far better outcomes (faster results, faster training, better graduation rate, better placement rate, and higher starting salaries).

The key follow-up question: “Why should I spend so much longer in your training program when I could be rapidly earning $54,000 to $85,000 per year as a starting salary, instead of that extra time in training, often with worse placement and salary outcomes? I’d also be learning more real-world on-the-job-training once I’m hired, right?”
 

4.) Did this training program ever charge considerably less for courses that are remarkably similar to this one? 

Small price increases over years are normal, but drastic increases in price for the same program—especially over a short span of time—are another red flag.

Think about it: Why would this training program nearly double the price for a relatively similar education and amenities? If the training provider cannot answer transparently and honestly, with written proof, then the competition can probably easily answer the question. The competition also probably knows the lower rates previously charged.
 

5.) Can this training program please disclose, in writing, how much of my tuition is actually paid for by my ISA? (as opposed to paying investors their “cut.”)

Many ISA programs provide a significant cut to external investors instead of the actual training program. Be sure to ask how much cash the actual school receives from the ISA provider DURING YOUR TENURE that directly goes to providing your education.  How much of your ISA is going to the funding provider (who expects  to see a big profit) vs. the actual training provider to provide your educational experience?

A non-profit organization (like Eleven Fifty Academy) contributes 100% of the funding into your education and not into the hands of investors seeking to profit handsomely. This difference can save you tens of thousands of dollars. But don’t expect the for-profit training provider to make it easy for you to get an entirely truthful answer.  Their business model may very well depend on students not figuring this out.

NOTE: Do not let a training provider “deflect” by saying you won’t owe anything back unless you get a job. Never lose sight that you are doing the training for the explicit purpose of getting an excellent job with high compensation. You deserve it if you’ve put in the work!
 

6.) What is this training program’s Faculty to Student Ratio, when factoring in the in-person hours in the classroom? 

How many “contact hours” does this particular training program have? (“Contact hours” means the hours actually in the classroom, even if virtual, with the promised number of teachers and learning assistants present and available to you.)   

Note that there’s a giant difference between online courses, which are often self-paced with little interaction, versus a virtual classroom that maintains high-touch interaction with multiple instructional staff, similar to the way a physical classroom would work for a high-touch training program that provides established and proven outcomes.
 

7.) What is the  minimum salary that the training provider guarantees before payments are required to repay the ISA?  

Is the minimum salary as high as $42,000, like the Eleven Fifty Academy PISA? Is it as high as competing programs that have demonstrated a significant average starting salary and high placement rate?

Eleven Fifty, for example, has placed hundreds of graduates with an average starting salary of $54,000 and many graduates starting in the $70k to-$80k range.
 

8.) If I make $70k per year, just like many graduates average in their first few years with similar training, what is the actual cash amount that I would need to pay back for my $24,000 ISA? 

If paying back at 13.5% of my expected salary of $70k for 4 years, it would total $37,800 for the tuition. That seems like a significant amount  for an education that can be accomplished faster (e.g. in 3 months) with better proven outcomes of speed of education, graduation rate, placement rate, starting salary, etc…. 

Be sure to consider the “effective interest rate” on the TRUE cost of education. Look at the costs of other similar programs then deduct that from your final payback total. (So $37,800 – $13,500 = $24,300, the effective INTEREST(!) over 4 years, which is $6,075 of “effective interest” per year. This means the “effective APR” is actually $6,075 / $13,500 = 45%. That is considered usury and is considered illegal in every state of the US.  It is enforced through “loan shark” laws.

With ISAs being relatively unregulated in the US, it’s easy for programs to become predatory and illegally inflate the cost of education with the illusion that the “effective interest” was low. (In fact, a quick online search will show you there have already been lawsuits across the country over ISA practices.)

The reality often hits successful graduates after the first year when they’re salary increases to $60k or more, generating excessively high ISA monthly payments for 4 years. That’s why it’s so important to do your research and know what you’re getting into before you sign your name! Being a smart shopper can and WILL save you tens of thousands of dollars–money you could put toward a new car, a downpayment on a house, savings, travel, etc.
 

9.) Does the training provider take more than 5% of my annual compensation after I successfully get a job and get placed into a “living wage” salary?  

For-profit programs often take as much as 11-15% of your income, while non-profits take as little as 5% and only until the “principal” is repaid..
 

10.) What is the training provider’s average placement rate within 6 months after I start my first day of class (not after the last day of class)?

Programs with strong connections and career services get students the tools they need to get placed from day one, cutting down on the gap between when they finish their program and when they land a job.
 

11.) How many actual placements has this training provider made with actual third-party employers (that are not the training provider itself, which is a common trick by ISA training programs)? 

Ask for a written list of ALL employers where the training provider’s graduates have been placed within 3 months of graduation. Can you talk to any of those graduates or employers? Best idea: Ask them for a list of 100 of those graduates so you can pick 3 of your own choosing.

12.) What is this training provider’s average salary upon initial placement? 

Are starting salaries of this training provider’s students as high as other considerably lower-priced non-profit training providers, especially ones that place at average salaries of more than $54kto start, with many salaries starting in the $70k’s and $80k’s? 

It might feel uncomfortable to have these conversations, but if the training program isn’t willing to talk, it’s a huge red flag. DO NOT let them deflect the answers to your questions by saying you won’t owe anything unless you get a job. If they do their job right, you WILL have a job and they WILL get a share of your income. 

Never lose sight that you’re investing in training for the explicit purpose of getting an excellent job. Don’t waste your time getting sub-par training that won’t get you a high paying-job. Your time is one of your most valuable assets, so be sure to put in the effort for the FULL picture of your training program and ISA agreement before you get started.

 

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