Sec. 102. Consumer protections for educational income share agreements
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An ISA provider shall not enter into an educational ISA with an ISA recipient if the ISA recipient would be committing more than a total of 20 percent of the student's future income toward the payment of such educational ISA and all other educational ISAs of the ISA recipient. In calculating the portion of a student's future income for purposes of this subsection, the ISA provider may rely on a self-certification from the ISA recipient regarding the ISA recipient’s outstanding educational ISAs, as of the date of the agreement.
For the purposes of calculating the portion of an ISA recipient's future income that would be consumed by the educational ISA for which the ISA recipient has applied and all other educational ISAs of the ISA recipient as of the date of the agreement, the ISA provider shall calculate the aggregate future burden— in any case where the income threshold of the educational ISA is less than the maximum described in subparagraph (B), at hypothetical future income levels from such income threshold to the such maximum, in increments of $10,000; and in any case where the income threshold of the educational ISA is equal to or greater than such maximum, at such income threshold.
The maximum described in this subparagraph shall be the greater of— for fiscal year 2023, $70,000; or for fiscal year 2024 and each subsequent fiscal year, the maximum for the preceding fiscal year— increased by the percentage increase in the consumer price index; and rounded to the nearest $1,000; and in the case of an ISA recipient who has (as of the date of the agreement), or has applied for, an educational ISA that uses a schedule of income percentages or a schedule of fixed amounts as the ISA payment calculation method, the highest income level referenced by a schedule for any such educational ISA.
The terms of an educational ISA for which the ISA recipient has applied cannot cause the student’s aggregate future burden (defined as the total amounts expected to be due under all educational ISAs of the ISA recipient as of the date of the agreement, and all educational ISAs for which the ISA recipient is applying) to exceed the limit in paragraph
(1)at any of the income increments described in subparagraph (A). For the purpose of calculating the percentage burden of an educational ISA at a given future income level, the ISA provider shall, as applicable, use— the income percentage that would be applicable for the educational ISA at such income level; or the fixed amount applicable for the educational ISA at such income level, divided by such income level. The educational ISA shall provide that when an ISA recipient has an income that is equal to or below the income threshold of the educational ISA, the ISA payment obligation is zero dollars. The income threshold for an educational ISA shall be an amount such that the difference between the ISA recipient’s income for the payment period, minus the subtraction of any ISA obligation, is not less than 200 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 )), prorated for the payment period. An educational ISA shall offer not less than 3 months of voluntary payment relief pauses (as long as the ISA recipient’s current income at the time of requesting the payment relief pause is equal to or less than 400 percent of the Federal poverty line (as defined in section 673 of the Community Services Block Grant Act ( 42 U.S.C. 9902 )) for a single individual) for every 30 income-determined payments required under the educational ISA. The payments required under an educational ISA for an individual with income during the payment term that is less than or equal to 300 percent of the poverty line for a single individual, prorated for the payment period, shall not exceed the payments on a comparable loan that bears interest at a rate less than or equal to one-half of the annual percentage rate of interest limitation under section 987(b) of title 10, United States Code. The ISA maximum number of payments shall not exceed 240 monthly payments. The ISA duration of an educational ISA shall not exceed 360 months (except in the case of an extension requested by the ISA recipient). An educational ISA shall not be construed to give the contract holder any rights over an individual’s actions other than as provided in this Act.
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Sec. 102
Consumer protections for educational income share agreements
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