USA Income Share Agreements


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Dec 16, 2021
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Hi Accountants!
I may accept a job at a startup in a vocational school that offers student financing via Income Share Agreements.
Income Share Agreements allow the school to accept an advance from the financier and then payments months later based on the student's income.
(https://www.nerdwallet.com/article/...ts-what-students-should-know-before-borrowing)

My question is, how does the school account for the revenue? Book the list price of tuition when the student begins the course and put the balance in AR? The actual payment received can vary greatly. The student pays a fixed % of their income until they hit double the tuition amount or 42 months. Depending on income after the program ends, students would pay a maximum of double the tuition amount or the fixed % of their income over 42 months (unless they hit the maximum of double their tuition first).

What does accounting book to revenue? AR?
The next question is how to handle cancellations or students who don't achieve employment? But the first question is a priority.
Thank you!
 
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