What is School Income Guarantee (SIG)?
School Income Guarantee (SIG) is a financial model where a third-party provider guarantees 100% of a school's tuition revenue on a predictable schedule — regardless of whether individual families pay on time, pay late, or don't pay at all. The provider assumes full responsibility for collection risk and delinquency management. In exchange, the school pays a take rate that is always lower than its historical delinquency rate, resulting in a net financial gain.
The concept was pioneered in Brazil under the name "Receita Garantida" (Guaranteed Revenue) by entrepreneur Danilo Costa, whose company Educbank scaled the model to over 1,000 schools and 250,000 students before being acquired by a NASDAQ-listed company. Clad Payments is the first company to bring School Income Guarantee to the United States, serving private preK-12 schools and childcare centers
How School Income Guarantee Works
Under a School Income Guarantee arrangement, the process is straightforward. A school partners with a SIG provider like Clad. The provider analyzes the school's historical payment data, enrollment patterns, and delinquency rates. Based on this analysis, the provider offers a take rate — always lower than the school's current rate of late or missed payments. Once the agreement is in place, the school receives 100% of its expected tuition revenue on a guaranteed schedule, typically monthly. The SIG provider handles all collection, follow-up, and delinquency management directly with families, removing that operational burden from the school entirely.
This means schools no longer have to choose between enforcing payment policies and maintaining relationships with families. The SIG provider absorbs the financial risk and the administrative friction of collections, while the school focuses on education.
The Problem School Income Guarantee Solves
Private schools and childcare centers in the United States depend heavily on tuition for their operating revenue. According to the National Association of Independent Schools (NAIS), net tuition revenue represents approximately 80% of the average independent school's total revenue. When families pay late or default, the financial impact is immediate and severe — affecting payroll, facility maintenance, program quality, and long-term planning.
The challenge is compounded by the relationship dynamic unique to education. Unlike a bank or utility company, schools serve children. Aggressive collection tactics damage trust, harm the school's reputation, and can lead to families withdrawing, further reducing revenue. Many school administrators describe being caught between financial necessity and compassion, forced to chase payments from the same families they see at drop-off every morning.
School Income Guarantee eliminates this tension by transferring the financial risk entirely to a third party. The school is made whole regardless of individual family payment behavior.
Who Benefits from School Income Guarantee
Private K-12 Schools
Independent and private schools face a growing affordability challenge. NAIS data shows that median net tuition covered only about 76% of actual per-student expenses in the 2022–2023 school year. When delinquency erodes even that revenue, schools face difficult choices about staffing, programs, and financial aid. SIG stabilizes the revenue side of the equation, giving school leaders the predictability they need to plan and invest with confidence.
Childcare Centers and Preschools
The childcare sector operates on especially thin margins. A 2024 NAEYC survey found that 55% of childcare program administrators reported being underenrolled, with lack of affordability for families cited as a top factor. Meanwhile, childcare prices have risen 29% over five years according to Child Care Aware of America. Centers that lose even a small percentage of expected revenue to late payments can be pushed toward reducing staff, closing classrooms, or shutting down entirely.
Families
While School Income Guarantee is a service for schools, families benefit too. Because the school's revenue is guaranteed, there is less pressure to enforce rigid payment deadlines or impose punitive late fees. Families interact with a professional, respectful payment experience rather than navigating awkward conversations with their child's school.
How School Income Guarantee Differs from Other Financial Solutions
SIG vs. Tuition Management Companies
Traditional tuition management companies process payments and may offer payment plans, but they don't guarantee revenue. If a family doesn't pay, the school still bears the loss. SIG providers guarantee the revenue regardless of family payment behavior.
SIG vs. Tuition Insurance
Tuition insurance (sometimes called tuition refund plans) protects families who need to withdraw mid-year due to illness or other covered events. It doesn't address ongoing delinquency or late payments. SIG covers the full spectrum of payment risk across the entire enrollment.
SIG vs. Factoring or Invoice Financing
Some schools consider factoring selling receivables at a discount to get cash faster. This is a debt instrument that requires repayment if families don't pay. School Income Guarantee is not a loan. The SIG provider assumes the risk permanently. If a family never pays, the school has already received its guaranteed amount.
Clad Payments: School Income Guarantee for the US Market
Clad is the first School Income Guarantee platform built specifically for private preK-12 schools and childcare centers in the United States. Founded by Danilo Costa — who previously created and scaled the SIG model to over 1,000 schools in Brazil through Educbank — Clad brings a proven approach to a market that has lacked this option entirely.
Clad currently serves schools and childcare centers across seven US states. The company maintains 100% school retention, and 96% of new partnerships come through referrals from existing schools — a reflection of the model's impact on school operations and financial health.
Schools pay no setup fees. Families pay no transaction fees. Clad's take rate is always lower than the school's historical delinquency rate, meaning schools come out ahead from day one.
FAQ: Frequently Asked Questions About School Income Guarantee
Is School Income Guarantee a loan?
No. SIG is not debt financing. Schools are not borrowing against future tuition. The SIG provider guarantees revenue and assumes collection risk in exchange for a fee. There is no repayment obligation.
What happens if a family stops paying entirely?
The SIG provider absorbs the loss. The school has already received its guaranteed payment. The provider manages all collection efforts directly with the family.
How is the take rate determined?
The take rate is calculated based on a confidential analysis of the school's historical payment data, enrollment patterns, and delinquency rates. It is always set below the school's historical rate of late or missed payments, ensuring the school gains revenue compared to its current situation.
Does SIG work for schools with low delinquency rates?
Yes. Schools with low delinquency rates receive a correspondingly lower take rate. Beyond the direct financial benefit, these schools gain predictability, reduced administrative burden, and protection against unexpected payment disruptions.
Where did the School Income Guarantee model originate?
The model was created in Brazil by Danilo Costa under the name "Receita Garantida" (Guaranteed Revenue). It has since been adopted by over 1,000 schools serving 250,000+ students in Brazil, with multiple companies now operating in the category. Clad Payments is bringing this proven model to the United States for the first time.
Sources Referenced on Page
NAIS, "Open Door: The Impact of Money in Independent School Culture and Communities," 2024 — net tuition ≈ 80% of revenue
NAIS 2022–2023 Facts at a Glance via TADS — net tuition covers ≈76% of expenses
NAEYC ECE Workforce Survey, January 2025 — 55% underenrolled
Child Care Aware of America, "Child Care in America: 2024 Price & Supply" — 29% price increase over 5 years