February 22nd, 2021Nick Chua

What are income share agreements?

Income share agreements, or ISAs, are essentially IOUs, but instead of having an exact number attached to the IOU it's based on a percentage of a person's salary. Edith's standard ISA is 1% for 1 year after graduation. For example, if your base salary was $100,000 for your first job, you would repay $83 a month to your mentor for your first year of work. Other types of compensation like signing bonuses or end of year bonuses aren't considered as part of the ISA.

Why use an ISA?

2 main reasons:

  1. They're affordable - not every college student has extra money to pay for help, and at Edith we believe that your success should be gated by your effort, not your money or connections. That's why we use ISAs. You pay later based on how successful you become, not by how much money you have today.
  2. They promote long-term connections - unlike other mentor platforms where you pay per meeting, our mentors aren't incentivized to upsell you every time they meet. The ISA incentivizes everyone to work together for longer periods of time, which really allows your mentor to understand your specific context when giving advice. To us, this is the secret sauce to success.

What are the terms of Edith's ISA?

Edith's ISA is super simple - 1% of your base salary for 1 year after graduation, assuming that you make over $40,000 a year in your job. If you don't make over $40,000, you don't repay anything until you do.

What if I don't find a job immediately after graduating?

No problem, Edith will continue to work with you to help you find a job after graduation. During that time, you won't owe anything and your ISA enters what's called a deferment period. The beauty of an ISA is you owe nothing upfront, and only have to repay once you find a job.

If you end up not finding a job or end up making less than $40,000 a year for any reason (grad school, illness, etc.) your ISA enters a deferment period where you owe nothing!

What's a deferment period and how long does it last?

If you earn less than $40,000 for any reason (grad school, loss of employment, medical reasons, etc.), your ISA enters a deferment period. During this period, you owe nothing until you make a salary above $40,000 a year ($3,333 monthly). If your ISA is in a deferment period for over 5 years, the ISA is completely canceled and you'll owe nothing.

What if I become the next Mark Zuckerberg and become a millionaire in college?

That's great! We hope you do. The Edith ISA has a payment cap of $2,000, so even if you do become the next Mark Zuckerberg you'll never repay more than $2,000. We also have plenty of mentors in the VC/startup space, so we can definitely help you get there if that's something you're interested in.

Any other questions? Reach out to us at founders@edithlabs.com!

Nick Chua

Nick Chua is the CEO & Co-Founder of Edith. Formerly at Inoca Capital and UChicago Tennis.

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