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Korean J Financ Stud > Volume 48(2); 2019 > Article
Korean Journal of Financial Studies 2019;48(2):237-255.
DOI: https://doi.org/10.26845/KJFS.2019.    Published online April 30, 2019.
A Study on Overseas ISA Cases and their Implications
Kyoung Hun Bae, Hyoung Goo Kang, Keun Woo Park, Sung Young Bae, Ji Yeol
ISA 해외사례와 시사점에 관한 연구
배경훈, 강형구, 박근우, 배성영, 오지열
This study explores various overseas cases of income share agreements (ISAs) and their implications in order to discuss possibilities of enabling educational innovations through finance. Through an ISA contract, the investor provides capital to students, who then shares a set proportion (e.g., 10%) of her future income above a certain threshold over a predetermined period of time. While current studies in Korea focus on traditional means of student financing, studies on equity-based higher education financing such as ISAs have not been forthcoming. This equity-based financing of higher education, when combined with the existing student loan policies, broaden the financing options for the students, enabling them to form an optimal capital structure for their human capital. From an investors perspective, this also contributes toward portfolio diversification. When an educational institution directly participates in an ISA scheme, they are also provided with a greater incentive to improve their own quality of education. In addition, risk sharing properties of ISAs can increase the students’ incentive to progress to high-risk careers such as startups, which can further contribute toward long-term economic growth and stimulate innovation. However, ISAs are not without their own problems, particularly from the perspective of fairness and moral hazard. With this in mind, in this study, we engage in a thorough case study of how equity-based student financing policies are being conducted abroad. First, we provide examples of such equity investment student financing. Second, by engaging in a thorough literature review, we provide an outline as well as both advantages and disadvantages of ISAs. Finally, through a brief introduction of ISA-related legislations, we provide insights on the environment necessary for enabling ISA policies in Korea.
Key Words: ISA,인적자본투자,투자형학자금,학자금정책,교육투자,Human Capital Investment,Student Investment Fund,Student Aid Policy,Education Investment

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