July 28, 2022
The bipartisan bill would create new guardrails for income-share agreements used in higher education programs and is supported by ISA providers. Critics, however, view ISAs as a predatory form of financial aid and a bad solution to making college affordable.
A bipartisan bill introduced last week would add new guardrails around income-share agreements, a student aid alternative that, until recently, had limited federal oversight.
ISA lenders and consumer advocates alike have been calling for clarification on the legal rules they must follow since the Education Department clarified in March that ISAs are considered private student loans. The announcement from the department subjected ISAs to the same set of consumer protection laws as private student loans. However, since ISAs, which are based on a student’s income, are different from traditional private student loans, ISA providers have been confused on how to interpret these laws.