Income-share agreements are loans, and provider misled students, CFPB says

Higher Ed Dive 

September 8, 2021
Rick Seltzer
Dive Brief:
  • The Consumer Financial Protection Bureau moved against a nonprofit organization that provides income-share agreements, saying it misrepresented the nature of ISAs, didn’t comply with federal law regulating private student loans, and imposed illegal fees or penalties for early repayment.
  • A consent order announced Tuesday requires the provider, Virginia-based Better Future Forward, to stop saying that its ISAs are not loans. It must also provide lending disclosures required under federal law and make changes to its ISA contracts.
  • Better Future Forward believes the “CFPB’s oversight role is critical” against an uncertain policy framework for ISAs, the organization’s CEO said in a statement. The federal agency didn’t hit the nonprofit with financial penalties, saying it showed good faith and cooperation beyond what the law requires.