Income share agreements are growing up — and not a moment too soon
Ethan Pollock
July 20, 2022
This week, Sens. Todd Young (R-Ind.), Mark Warner (D-Va.), Chris Coons (D-Del.), Marco Rubio (R-Fla.) introduced legislation that would explicitly apply existing federal consumer credit protections to income share agreements (ISAs) while also creating important protections unique to the financing tool. The new legislation comes just four months after the U.S. Department of Education weighed in on ISAs, clarifying that it considered the agreements to be private loans.
Few higher education issues in recent years have been more contentious than ISAs. To proponents, they represent a potential remedy to the nation’s student debt crisis, providing a less risky way for learners to pay for their education and an opportunity to hold schools accountable if the education they provide does not lead to student success in the labor market. To critics, they are no better than predatory and potentially discriminatory loans, drawing comparisons to indentured servitude. But recent developments like the newly introduced legislation — and the availability of new research on the impact of ISAs — reveal a path forward to ISAs as a viable financing option with strong and consistent protections for borrowers.
