So far, there are no documented cases of discrimination based on race or gender with ISAs, but some fear that if the ESAs become a more popular model, the potential for discrimination could increase. [3] While most financial markets are already subject to anti-discrimination laws that would likely apply to ISA investors, the issue has not yet been fully resolved. Some proponents argue that ISAs are less discriminatory in relation to credit: In the 1970s, Yale University attempted a modified form of Friedman`s proposal with several cohorts of students. At Yale, instead of entering into individual contracts for a fixed number of years, all cohort members agreed to repay a percentage of income until the balance of the total cohort was paid. However, the system left frustrated students paying more than their fair share by being forced to make payments on behalf of their peers who were unwilling or unable to repay their loans. [6] [Investors] could “buy” a share of a person`s income prospects: to provide them with the funds to finance their training, provided they agree to pay the lender a certain fraction of their future income. Thus, a lender would recover more than its initial investment from relatively successful people, which would compensate for the failure to recover its initial investment from the unsuccessful. Income-participation agreements are characterized by a percentage of future income for a given period. They can function as non-voting shares in a company where the individual student is treated as a business. In the U.S. system, this usually involves the investor transferring funds to a person in exchange for a fixed percentage of their future income. [3] [4] Other features of income participation agreements may be (a) a fixed duration of income participation (b) an income exemption if the borrower owes nothing below a certain income and/or (c) a buy-back option in which the borrower can pay a certain royalty to leave the contract before full maturity. .

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