Sec. 2. Definitions
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/bill/116/hr/1810/ih/section-2·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
For purposes of this Act: The term comparable loan means, with respect to an income-share agreement, a loan that— has an original principal amount such that, after any origination fees on the loan are paid, the amount of loan financing received by the individual is equal to the total amount of funding provided under the income-share agreement to or on behalf of the individual subject to the agreement; has the same term to maturity as the duration of the income-share agreement; and is fully amortized over such term with monthly payments of principal and interest.
The term income-share agreement means an agreement— between an individual and an ISA funder; which meets the requirements of section 102; and under which— the ISA funder pays amounts to, or on behalf of, such individual for costs associated with a postsecondary training program, or any other program designed to increase the individual’s human capital, employability, or earning potential (and not limited to programs eligible to participate in programs under title IV of the Higher Education Act of 1965), as well as any personal expenses (such as books, supplies, transportation, and living costs) incurred by the individual while enrolled in such a program, or for the refinancing of debt used for these purposes (hereinafter in this Act referred to as income-share funding ); and such individual pays to such ISA funder (or the ISA funder’s successor in interest) amounts equal to a specified percentage of the individual’s future income, for a defined term (hereinafter in this Act referred to as income-share payments ).
With respect to an income-share agreement, the term ISA funder means the party to such agreement who— pays amounts to, or on behalf of, an individual solely for the purposes specified in paragraph (2)(C)(i); and has the right to receive a specified percentage of the individual’s future income. The term Qualified ISA means an income-share agreement that complies with the following: The income-share agreement provides that when an individual subject to the agreement has an income that is equal to or below the amount that is 150 percent of the poverty line for a single person (as defined in section 673 of the Community Services Block Grant Act ( 42 U.S.C. 9902 )), the percentage of income obligation for the individual is zero.
The preceding sentence may not be interpreted to preclude the charging of fees or nominal payments (as described under section 102(a)(5)) during this period. The maximum percentage of income an individual would be required to pay under the agreement does not exceed 20 percent, and the product of such percentage and the number of years of the agreement does not exceed 2.25 (which figure is the product of 7.5 percent and the number of years in the longest allowable contract under section 102(a)(3)).
The payments required under such agreement for an individual with income during the payment term equal to 175 percent of the poverty line for a single person (as defined in section 673 of the Community Services Block Grant Act ( 42 U.S.C. 9902 )) would not exceed the payments on a comparable loan that bears interest at a rate equal to the annual percentage rate of interest limitation under section 987(b) of title 10, United States Code. The term State means the several States of the Union, the Commonwealth of Puerto Rico, the District of Columbia, Guam, American Samoa, the Virgin Islands, the Government of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands.
The term State law means any law, decision, rule, regulation, or other action having the effect of a law of any State or any political subdivision of a State, or any agency or instrumentality of a State or political subdivision of a State, except that a law of the United States applicable only to the District of Columbia shall be treated as a State law (rather than a law of the United States).
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U.S. Code