Main Points to Remember
- Both income share agreements (ISAs) and bootcamp loans are ways to finance your coding bootcamp education.
- Before turning to options that require repayment, such as ISAs or loans, it’s smart to first explore free financial aid like scholarships, grants, veteran benefits, or employer sponsorships.
- If you must borrow, compare your options carefully and go for the one that ends up costing you the least in the long run.
If you’re thinking about how to pay for a coding bootcamp, two of the most common choices are income share agreements (ISAs) and bootcamp-specific loans. Both can help cover tuition and offer flexibility in how you repay the money. However, your best option depends on how much it will cost over time.
Before borrowing, take advantage of free funding sources, such as:
- Scholarships
- Workforce development programs
- Military and veterans benefits
- Employer tuition reimbursement
Only turn to borrowing once those options have been exhausted.
An important difference to note is that income share agreements aren’t based on your credit score, unlike most bootcamp loans. So if your credit history is weak or nonexistent, an ISA may be a better and more accessible choice.
Also, ISAs don’t use APR (Annual Percentage Rate) to express costs like loans do, which can make them harder to compare directly. Here’s a detailed breakdown of both options to help you make a smart decision:
What Are Coding Bootcamp Income Share Agreements (ISAs)?
ISAs used for bootcamps work similarly to those used in colleges. A company or provider covers your bootcamp tuition upfront.
In return, you agree to pay a fixed percentage of your income after graduation, for a certain number of months.
One important thing to keep in mind is that ISAs aren’t regulated by the government. That means each provider sets its own rules — including how much you’ll pay, when repayment begins, and for how long.
Typically, you only start making payments once you’re earning above a certain income level, called the salary threshold. If you make less than that threshold, you’re not required to pay at that time.
Here are key elements to evaluate in an ISA:
- Income Share Percentage: This is the portion of your monthly income you’ll pay. Look for ISAs that ask for 10% or less of your monthly income to keep payments manageable.
- Salary Floor: This is the minimum income you must earn before payments begin. Be cautious with ISAs that have low salary floors, as you may have to start paying before you’re financially stable.
- For example, in 2019, the average U.S. salary was about $52,000, according to the Social Security Administration.
- Payment Cap: This is the maximum amount you’ll ever repay. Avoid ISAs that let you pay more than twice what you received or don’t have a cap at all. Without a cap, you might repay way more than you borrowed.
- Repayment Term: This is how long you’re obligated to make payments. Ask if the provider extends the repayment period during months when you aren’t earning enough. Some can stretch the term much longer than expected.
Example: Lambda School’s ISA
Lambda School charges about $15,000 for most programs and offers an ISA where:
- You pay 17% of your gross monthly salary.
- Payments continue for 24 months.
- Payments start only if you earn at least $50,000 annually.
- Total repayment is capped at $30,000.
- If your salary stays at $52,000, expect to pay around $737 monthly, totaling about $17,688 over the repayment period.
Depending on how much you earn and how long you pay, you could end up repaying less than you borrowed — or much more.
What Are Coding Bootcamp Loans?
Bootcamp loans are personal loans created specifically for students attending tech bootcamps. They are not the same as federal or traditional private student loans and don’t come with the protections those loans offer, such as income-driven repayment or federal deferment.
Federal student loans aren’t available for bootcamps, so these private options fill that gap.
When choosing a bootcamp loan, look at these features:
- Interest Rate: This is the cost of borrowing. Bootcamp loan rates can be high — sometimes above 25%. Avoid any lender charging more than 36% interest. Always choose the lowest total cost.
- Repayment Options: These describe when and how you’ll repay the loan. Some offer:
- Immediate repayment: You start paying right away.
- Deferred repayment: You begin payments after you graduate or land a job.
- Soft Credit Check: Look for lenders that offer prequalification with a soft credit check. This lets you see your potential interest rate without hurting your credit score. Compare several offers to get the best deal.
- Origination Fee: Some lenders charge a one-time fee to process your loan, often a percentage of the loan amount. This fee may be added to your loan balance, increasing your total repayment.
Example: Skills Fund Bootcamp Loan
Skills Fund offers:
- 3- and 5-year repayment terms
- Interest rates from 6.5% to 13.75%
- Four repayment plans, including a deferred option with a 3-month grace period
- A 5% origination fee, added to the loan amount
- Preapproval through a soft credit check
If you borrow $15,000, you’d be charged an extra $750 as an origination fee. At 13.75% interest over 5 years, your monthly payments would be around $364, with a total cost of $21,866.
If you qualified for a 6.5% rate and repaid it over 3 years, your monthly payments would rise to $483, but the total would be only $17,378.
So, Which One Costs Less — A Bootcamp Loan or an ISA?
There’s no one-size-fits-all answer. The cheapest option depends entirely on the specific offers you receive and your future income after completing the bootcamp.
To figure out which is more affordable:
- Compare both ISA and loan offers
- Look at monthly payments and total repayment amounts
- Consider the risks and flexibility of each option
Make sure to focus on the long-term cost, not just what’s easiest to qualify for right now. Getting the lowest-cost option — whether it’s an ISA or a loan — will help you start your new tech career on the right financial foot.
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