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A Coding School Tuition Model Spreads to Four-Year Colleges

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University Hall, Purdue University

Purdue University offers students money to cover college costs in exchange for a share of the students' future earnings.

Credit: Purdue University

Kenzie Academy, a for-profit tech school in downtown Indianapolis, aims to churn out graduates for well-paying jobs. Students can pay tuition of $24,000 if they have the money, but most of Kenzie's 500 students pay for the school through an income share agreement, or ISA.

Under Kenzie's ISA, students pay $100 up front and no tuition until they secure a job with a salary of at least $40,000. Once they do, they pay 13 percent of their monthly income for four years, up to a maximum of $42,000.

ISAs are gaining traction. More than five dozen U.S. universities and coding schools use ISAs, and in December the U.S. Department of Education said it would experiment with offering them.

As ISAs migrate from the margins of financial aid to the mainstream, the debate around them grows louder. Proponents tout the safety net they offer: unlike loans, graduates pay nothing if they can find only low-wage work. The tool also gives schools a financial incentive to help their students through to graduation and into good jobs.

But critics of ISAs argue that they are just a new spin on debt.

From Wired
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