Everyone’s path after graduation looks different. But there are always two ways to fulfill an ISA: You’ll either make the maximum number of monthly payments or hit the payment cap. Plus, if your payment window closes before you fulfill one of those obligations, your ISA will automatically expire, provided that you made payments as required when your earnings met the minimum income threshold. To get an idea of how your ISA experience might unfold, take a look at Michael’s example below.

01.

September 2020: Michael signs an ISA.

In his senior year, Michael carefully reads and signs his ISA for $10,000, which results in the following terms:

  • ISA Amount: $10,000
  • Income Share: 3.25%
  • Max Monthly Payments: 72
  • Payment Cap: 1.6x ($16,000)
  • Payment Window: 120 months
  • Min Income Threshold: $3,333.33/month ($40,000/year)

May 2021: Michael graduates from his university.

With the help of ISA funding, Michael graduates at the end of the school year.

02.

03.

June 2021: Michael enters his grace period.

Michael’s 6-month grace period begins shortly after graduation. Duringhis grace period, he’ll log into his ISA online account and update his employment and income information. Michael’s employment and income could follow any number of trajectories, but no matter what, his ISA will be fulfilled when he reaches the first of these endpoints:

  • 72 payments (i.e., maximum monthly payments), or
  • $16,000 total payments (i.e., payment cap)

Plus, if Michael’s payment window closes before he fulfills either of those obligations, and he has remained in compliance with his contract, his ISA will automatically expire.

 

Maximum Number of Monthly Payments

ISAs define a maximum number of monthly income-based payments. Once you make that number of payments, you fulfill your ISA—even if you’ve paid less than the initial funding amount.

04.

June 2021

Michael is hired for a job with a salary of $67,000, or $5,583/month. She submits income documentation for ISA servicing during her grace period.

05.

January 2022

Michael’s first monthly payment is due. (Monthly payment = gross monthly income x income share)

06.

February 2022–November 2027

Michael continues making monthly payments and submitting income documentation. His income may fluctuate with raises or job changes, but his income share will remain 3.25%

07.

December 2027

Michael makes the maximum number of monthly payments, fulfilling his ISA obligation.

*These figures are for illustrative purposes only and are not predictions of your unique payment experience. Actual ISA terms, expected earnings, employment outcomes, and payment experiences will vary.

*All figures in this illustration have been rounded to the nearest dollar.

Payment Cap

Over the course of making monthly income-based payments, you may hit the payment cap. When you hit the payment cap, you fulfill your ISA*—even if you’ve made fewer than the maximum number of monthly payments.

04.

May 2022

Michael is hired for a job with a salary of $69,000, or $5,750/month. She submits income documentation for ISA servicing during her grace period.

05.

January 2022

Michael’s first monthly payment is due. (Monthly payment = gross monthly income x income share)

06.

February 2022–October 2027

Michael continues making monthly payments and submitting income documentation. His income may fluctuate with raises or job changes, but his income share will remain 3.25%.

07.

November 2027

Michael hits the payment cap, fulfilling his ISA obligation.

*These figures are for illustrative purposes only and are not predictions of your unique payment experience. Actual ISA terms, expected earnings, employment outcomes, and payment experiences will vary.

*All figures in this illustration have been rounded to the nearest dollar.

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