Welcome to our blog

Read about ISAs, mentors, and current financial news.

Will Income Share Agreements (ISAs) only work by cherry-picking “STEM” programs? The reality is quite different.

|
Mar 02, 2019
|
Income-share agreements, Student loans

Update (3/2019): I had a great conversation with Will Quist at the 2019 Life Capital conference and acknowledge his well taken point. That is, in the discussion that follows, we are assuming that ISAs have a cap. The question of what kind of cap structure is optimal in ISAs goes beyond the scope of this article. A big thanks to Will for an insightful point! ---------------------------------------------------------------------------- Income share agreements (ISAs) have started to become a...

ISA Investment 101: Resource for ISA Investors

|
Jan 08, 2019
|
ISA investing

Since Purdue University established its income share agreement (ISA) program in 2016, ISAs are becoming more prominent in higher education. The opening up of this market creates a new asset class opportunity for investors. It also provides a space for impact motivated investors who also want a financial return to invest in education and diversify their portfolios. However, there is very little by way of information for accredited and institutional investors looking to invest in this space. This...

ISA Investment 101: The Basics of Investing in ISAs - The When, How, and Why

|
Jan 08, 2019
|
ISA investing

    Q: How did ISAs come about? What is their history? Although income share agreements have become more popular in recent years, the idea dates back to the 1950s. Milton Friedman originally proposed the concept of income share agreements in his essay “The Role of Government in Education.” In the essay, he outlines an “equity investment” in which investors can buy a share in an individual’s future earning prospects. In 1971, Yale University became one of...

ISA Investment 101: What Are Income Share Agreements?

|
Jan 08, 2019
|
ISA investing

What are income share agreements (ISAs), and how are they different from student loans? In simple terms, an income share agreement is an obligation, but not a loan, where the investor receives a fraction of income from a student during the payment term. The investment is a hybrid investment, in the sense that investors do get upside returns for a range of income levels. ISA terms can vary significantly across programs and investors, but there are some common elements. The following are some...

ISA Investment 101: Active Investment and the MentorWorks Approach

|
Jan 08, 2019
|
ISA investing

The predominant ISA opportunities currently available are passive financial investments. An important aspect of this is that the school shares in the risk of outcomes by participating in the investment. This is certainly a viable argument, and one that we believe. Based on long years of experience by the co-founders of MentorWorks in the higher education environment, however, we believe that there are limits to this effect. Educational institutions want to provide the best possible outcomes for...

ISA Investment 101: Due Diligence

|
Jan 08, 2019
|
ISA investing

In our time as angel investors, we have conducted due diligence through a relatively extensive process, with multiple checklists, reference checks, expert conversations, and document checks. Christopher Mirabile, Managing Director at Launchpad Venture Group describes due-diligence as an investment process: “Diligence is the fancy word for the process you use as an investor. A good process can help improve your returns.”  Due diligence is very contextual, however. Thankfully, the...

ISA Investment 101: Key Risks in ISA Investing

|
Jan 08, 2019
|
ISA investing

ISA investing strategy, like any other investment option, has risks. Having invested in early stage companies as angel investors, the co-founders of MentorWorks take risk and risk mitigation very seriously. Our ISA investment risk assessment strategy is similar to some angel investment risk assessment ideas. As an aside, Christopher Mirabile and Ham Lord, Managing Directors at Launchpad Venture Group, have a great article for angel investing risk assessment that we highly recommend. We give full...

ISA Investment 101: How Does Active ISA Investment Compare to Angel/VC Investment?

|
Jan 08, 2019
|
ISA investing

  There are some parallels between active ISA investing and angel investing. The fund and support approach that MentorWorks promotes is consistent with the angel or VC investing framework. That is, you fund a well-run startup and then you provide expert advice and guidance as well as connections to help the startup do well. The investor then shares in the part of the upside generated from this support. MentorWorks’ career augmented ISA program works along the same dimension. We fund...

ISA Investment 101: Where Do I find ISA Deals to Invest In?

|
Jan 08, 2019
|
ISA investing

The ISA market, much like angel investment or VC market, does not have a systematic platform to invest through. The one notable exception is Angellist, which started out as a listing platform for early stage startup equity deals.    Many schools are using their own capital to set up ISA programs, and hoping to sell or issue new ISAs after they reach a certain point. However, balance sheet based ISA financing is not a particularly great model for an educational institution with fixed...

Student Loans and Their Impact on Career Choices

|
Dec 17, 2018
|
Student loans, Income-share agreements

In an era of skyrocketing tuition costs and repeatedly slashed public education budgets, increasing numbers of American students have resorted to taking out loans in order to fund their education. Doing so saddles the student with a heavy burden of debt; the total accumulated student debt in the United States has been recently valued at approximately $1.5 trillion and rising,1 accounting for roughly 10% of all documented household debt.2 Statistics for students graduating in 2016 reveal that the...

Mentor Spotlight: Moe Bachouti, Career advice for Class of 2018

|
Jun 18, 2018
|
Career development and mentoring

Moe Bachouti   As the class of 2018 put on their caps and gowns to receive their diploma, they start an exciting new chapter in their lives. For many of them, this marks the end of their formal education and the start of their continuous lifelong learning. Moe Bachouti from Cambridge College speaks about how his constant thirst to learn from different people throughout his life has shaped him to become the person he is today. Below is a transcript of our conversation, it is lightly edited...

Expert Interview: Min Zhan & the Effect of Loans on Low-Income Students

|
May 17, 2018
|
Student loans

Joel had the opportunity to speak with Min Zhan, a professor at the University of Illinois. Her research focuses on the economic mobility of low-income families. Zhan finds that the human capital development provided by higher education can improve the economic standing of low-income students. However, low-income students usually take out large amounts of student loans, which can have negative effects on their financial wellbeing. In the following interview, Zhan discusses the impact of higher...

What Do Higher Interest Rates Mean For Your Student Loans?

|
May 15, 2018
|
Student loans

Once a year, the federal government sets the annual interest rate on federal student loans. This rate effectively determines how expensive it is for students to borrow money from the government for their education. Although this interest rate has been increasing in recent years, Congress has set a ceiling of 8.25% on these loans. While the Department of Education hasn’t formally set interest rates on student loans yet, this year’s rates are expected to increase. Last year,...

The Need for More Student Loan Research

|
May 14, 2018
|
Student loans

With nearly five million borrowers in default on their student loans, it is clear that the policies surrounding educational finance need improvement. When student debt levels increase, it has major effects on the overall economy. If policies don’t change, the student loan crisis has the potential to negatively impact the economy in years to come. In recent years, proposals for student loan policy have been based primarily on preconceived notions and assumptions. In order to make informed...

UCLA Professors Discuss the Cost of Higher Education

|
May 10, 2018
|
Student loans

The cost of a college education is becoming more and more expensive. A recent report by the College Board states that going to a private four-year institution costs $34,740 a year. In 1988, this number was $15,160 (adjusted for inflation). As rising costs threaten college accessibility, the US government has implemented large-scale initiatives to help students pay for college. One such initiative is the PLUS loan program. There are approximately 4.5 million students with loans from the PLUS...

Join our mailing list