How one Utah resident skipped college, took on a high-stakes student loan, and succeeded

When John Isom turned down an opportunity to go to the University of Utah to study computer science and take on an income-share agreement (ISA) to finance the education, he was aware of the risks.

“I created a mock budget… and saw how much debt I was going to have to take on,” Isom said in an interview with Yahoo Finance. “Even with a little bit of a scholarship, it honestly didn’t do much — it’s still wildly expensive. You have no choice but to take out a federal student loan.”

The 20-year-old, who graduated from high school in 2019, had been offered a small scholarship to attend the University of Utah in the fall of that year. But then, his older brother introduced him to an online program called Launch School, which pushed him to consider an alternative path into software engineering.

Drawn in by the school’s high average starting salaries for graduates, Isom agreed to an ISA that was “16% of my first year salary within a year, and then it expired,” he explained. “And it was only for one year’s worth of salary — it wasn’t like taking as a 16% cut every year for five years. So it was much lighter. I have heard those kinds of horror stories where people get kind of trapped in these income share agreements.”

Software engineers hang out in San Francisco on October 30, 2016. (Reuters)

Software engineers hang out in San Francisco on October 30, 2016. (Reuters)

He’s since paid off the ISA, which he said only ended up being $19,400, and is now into his second job as a software engineer.

“I feel very confident in my ability to go forward,” Isom said.

Isom isn’t the only one who’s skipping college to take an alternative route to the workforce as conversations around the high cost of college and the massive amount of outstanding student loan debt have pushed many to reconsider earning the typical college degree.

But notably, Isom is a success story in terms of students who took on an ISA and did not regret the decision of agreeing to an ISA from a relatively unproven institutions to finance his dreams.

“At every casino, someone makes it rich,” Ben Kaufman, director of research & investigations at the Student Borrower Protection Center, told Yahoo Finance. “The reality with coding bootcamps and the predatory financing they rely on is that students are far less likely to end up hitting the jackpot than they are to find themselves broke and disappointed. For-profit coding boot camps make promises of quick riches, but too often, it’s all just smoke and mirrors. Students shouldn’t have to roll the dice in order to receive the education they were promised.”

Grandma ‘eventually came around’

The traditional college route is slowly becoming less popular more generally.

Enrollment in U.S. higher education fell by 2.7% in fall 2021, following a 2.5% drop from the previous year, according to the National Student Clearinghouse Research Center. Undergraduate enrollment fell by 3.1%, the research found.

And according to a survey by Gallup and the Lumina Foundation, nearly half of U.S. adults without a college degree have considered enrolling in a college but didn’t because of costs.

A recent report by the Texas Public Policy Foundation that looked at Department of Education data found that the median student loan debt for a bachelor’s degree was roughly $24,000 while the median student loan debt for a computer science bachelor’s degree was approximately $22,283.

The average student loan debt by state. (Map: Texas Public Policy Foundation)

Some employers, keen on ramping up hiring, are dropping college degree requirements for jobs to attract more workers. A recent report by the Wall Street Journal also highlighted how some big employers like Okta (OKTA) have become so keen to hire talent that they’re willing to train blue-collar workers to fill roles.

Other companies have decided to take a middle-of-the-road approach, investing in collaborations with collages to develop talent rather than to groom talent in-house.

Microsoft (MSFT) has poured money into community colleges to develop cybersecurity professionals, a sector that’s facing a massive shortage, Yahoo Finance reported last year.

Isom’s father was immediately supportive after Isom presented his career plan, but his grandmother was “a little harder to get her on board,” Isom said. “But I think she eventually came around once she saw how well I was doing.”

Isom said he was very happy with his decision, even if it was uncommon among his peers.

“I didn’t really know anyone else who [chose] to skip college and go into some other time of schooling that was for a white-collar job,” he said.

Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.

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