Avenify is a startup that allows students to sell equity in their future income to investors in exchange for funding to attend school. Our approach to student financing is simple and outcomes-based, leveraging Income Share Agreements (ISAs) to attack the student debt problem from the supply side.
Because ISAs allow students to obligate a percentage of their future income in exchange for upfront capital, ISAs behave more like equity than debt. Terms are expressed as a fixed percentage of income (3% of pre-tax salary, due monthly for 120 months, say), so there’s no “balance due,” in the traditional sense, and if a borrower’s income drops to $0 (or below a minimum income threshold), so do their payments.
On the flip side, students may end up paying back more than they would with a loan — up to a point. Payback is capped at 2.5 times the amount borrowed to prevent the ISA obligation from becoming usurious. With ISAs, we’re able to cap downside risk for our borrowers while allowing investors to capture some of the upside value they create for students.