Income Share Agreements to Finance Short-Term Career Training

Preliminary Findings from the Career Impact Bond Study

Mature students in front of computers
By Gilda Azurdia, Richard Kazis, Caroline Schultz, Katerina Galkin

Postsecondary education and middle-skills occupational training are viewed as impor­tant paths to higher-paying jobs and careers. Lifelong learning pathways geared toward working learners aged 25 and older also seem essential for career advancement and professional growth in the current job market. However, many learners face financial and other barriers to accessing and completing occupational training courses. The cost of education has also increased across different types of institutions, while financial sup­port for education has declined. Research also shows that learners of color have been excluded from higher education opportunities because of inequities that are often rooted in historical and systemic racial discrimination and biases.

In 2019, Social Finance, Inc., a national nonprofit that creates impact-first investments (investments that are designed to generate positive outcomes for people and communities), launched the UP Fund, a $50 million fund that aims to improve economic mobility by expanding access to job training programs to underserved learners and learners from low-income backgrounds. The UP Fund enables learners to enroll in short-term, sec­tor-based occupational training programs with access to career and supportive services without paying up-front tuition costs. Learners enter into “income share agreements” (ISAs) that are intended to help them repay tuition costs. This outcome is achieved by learners committing to repay a fixed percentage or amount of their income over a set term and up to a capped amount. However, this repayment obligation is contingent upon the learner’s earnings meeting a minimum income threshold. The UP Fund’s Career Impact Bond (CIB) model focuses on providing ISAs to learners from low-income back­grounds who might not otherwise have access to the training programs. The CIB model also emphasizes the importance of comprehensive support services to help learners achieve career success.

With support from Strada Education Foundation, MDRC launched a multisite, multiyear study of the UP Fund’s CIB model in 2022. The study includes four training providers that enroll learners financed by the UP Fund across multiple industries. The study has four main goals:

  • Build knowledge on whether the CIB model can increase affordability and access to short-term training courses.
  • Document the experiences of learners in these programs.
  • Examine learners’ short- and long-term outcomes.
  • Assess whether the CIB model is a sustainable and scalable financial model.

This brief provides an overview of the study, details of the UP Fund’s CIB model, and early imple­mentation findings. Initial results suggest that individuals who enrolled in a training program supported by the UP Fund learned helpful skills to find jobs in their chosen careers. Many enrollees also reported that without access to ISAs, it would have been difficult to pay for the training programs. However, the findings show that some learners had difficulty understanding the terms of the ISA, and more than half of the learners who were required to make ISA repayments were not doing so after grad­uating from their training programs. The initial results also indicate that ISA repayment outcomes vary by learner subgroups defined by race, age, gender, and educational attainment. Finally, the study’s findings reveal challenges in implementing the model, given the ISA market’s evolving regulatory environment (at both the federal and state levels). A final report expected at the end of 2024 will present longer-term outcomes and address a variety of research questions.

Document Details

Publication Type
February 2024
Azurdia, Gilda, Richard Kazis, Caroline Schultz, and Katerina Galkin. 2024. “Income Share Agreements to Finance Short-Term Career Training.” New York: MDRC.