If you`re a student in Indonesia looking for an alternative way of financing your education without having to worry about high interest rates or loan repayments, then you might want to consider an income share agreement (ISA).
An income share agreement is a financial arrangement between a student and an investor, where the investor agrees to pay for the student`s tuition fees and in return, the student agrees to pay a percentage of their future income for a set period of time after they graduate. This means that the student is not burdened with the high costs of education upfront and only pays back a percentage of their income when they start earning.
This type of financial agreement is gaining popularity in Indonesia, particularly as traditional student loan models can be difficult to access for those who may not have a credit history or a stable income. ISAs also offer more flexibility as they do not require collateral, meaning that students who may not have assets to pledge as collateral can still access education financing.
One of the companies offering income share agreements in Indonesia is Mekar. They have teamed up with several universities, including Binus University, to provide education financing options to students. Mekar offers ISAs with terms ranging from 1-10 years, with repayment amounts ranging from 5-15% of a student`s monthly income.
ISAs can also be beneficial for investors as they offer a potential return on investment. Investors who choose to fund a student`s education through an ISA will receive a percentage of the student`s future income for a set period of time. This means that investors have an incentive to choose students who are likely to have high earning potential after graduation.
However, it`s important to note that income share agreements are not without their risks. Students who choose to enter into an ISA should carefully review the terms and conditions, including the percentage of their income that they will have to repay and the length of the repayment period. As the percentage of income repayments can be high, students should take care not to overestimate their earning potential after graduation.
Overall, income share agreements offer an alternative way of financing education for students who may not be able to access traditional student loans. With the rising cost of education in Indonesia, ISAs are becoming a popular choice for students looking to pursue higher education without being burdened with high interest rates and loan repayments.