Better Future Forward
Income Share Agreement Fund for Minnesota & Wisconsin
Established in 2016, Better Future Forward (BFF) is a nonprofit public charity leading a movement in education finance reform. BFF believes everyone, including low-income students, should have the chance to succeed in college without worrying about how to afford school, how to afford future payments, or whether their hard work pays off financially.
Venn’s PRI will help BFF continue offering its innovative and concessionary “Income Share Agreements” (ISAs) to students who participate in select college access and success programs in Minnesota and Wisconsin. It is hoped that with Venn’s support, BFF can complete its proof-of-concept phase, demonstrating ISAs can be provided to low-income students in a way that is sustainable, protective, and outcomes-based.
What is an Income Share Agreement?
ISAs are an innovative financial product for higher education, and they work like this:
The student receives funds to help cover the cost of education.
In exchange, the student agrees to make a fixed number of income-determined monthly payments after leaving school and following a transition period.
The student will only have an obligation to make payments in months where s/he is earning above a minimum amount.
The total amount the student pays is calculated based on income after graduation or withdrawal, not simply the funding amount. Some students will pay more than their funded amount. Students who don’t do well financially may pay less than their funded amount.
Details about BFF’s “Opportunity ISA” terms can be found here.
Students Served
Over the last three years, BFF’s first Opportunity ISA Fund for Minnesota and Wisconsin has worked closely with its program partner College Possible to deploy nearly $900,000 to 98 students.
72% families below $50,000 household income
80% first generation college attending
65% with no other family members attending college
100% referred through College Possible
Venn’s PRI to BFF’s second Opportunity ISA Fund for Minnesota and Wisconsin will continue to be deployed to College Possible student referrals, and similar student demographics are anticipated. It is also possible other BFF may partner with additional college access programs in Minnesota and Wisconsin to deploy ISAs in the future, especially as the fund grows.
Recipient Name: Better Future Forward Opportunity ISA Fund (CP2), LLC
Subsidiary Structure: Wholly-Owned Subsidiary of Better Future Forward, a Nonprofit 501(c)(3) Public Charity
Investment Sought: $400,000 - $2,100,000
Raised to Date: $400,000
Overview of Investment Terms:
Annual simple interest of 2.5%
No maturity date or fixed repayment schedule
Accrued interest and principal are repaid as the fund generates “Net Revenues” from student ISA payments
After 10 years, Venn may direct BFF to use commercially reasonable efforts to refinance the PRI
Student ISAs serve as collateral