A group of 20 education organizations and individuals have sent a letter to the leaders of the House Financial Services Committee and Senate Finance Committee urging Congress to pass legislation that would provide a legal framework for colleges and universities and other education providers to offer income share agreements (ISAs) to students. The individuals signing the letter were former Democratic Delaware Governor Jack Markell, who is now a Vemo Education board member, and John Bailey, who served as a White House Domestic Policy Adviser to President George W. Bush and is now a Kenzie Academy board member.
The letter describes the ISA model as holding “profound opportunity to make good on the promise, and potential of higher education” and offering a way to shift the economic risk of higher education away from students. In that regard, the signers note that ISAs are currently being used by a diverse population, including individuals with no access to government aid (such as Dreamers), college students nearing the completion of their studies and concerned about taking on additional expensive private loans, those forced by economic circumstances or technological developments to learn new skills, and working adults going back to school.
The letter then identifies some of the key provisions for legislation that protects students while providing guidance for institutions and ISA providers. It indicates that ISA legislation should establish a definition of an ISA, provide a disclosure framework, set a national minimum income threshold (below which payment by a student would not be required), create protections around “stackability” (limits on the number of ISAs and/or the maximum amount of income that might be committed), provide clarity on tax treatment for students and institutions, and designate a federal regulator. The letter notes that ISAs should not be viewed as replacements to federal loan or grant programs, and that implementation of ISAs must be considered in the context of existing income-based repayment options.
Earlier this month, Democratic Senator Elizabeth Warren, together with Democratic Representatives Ayanna Pressley and Katie Porter, sent a letter to the Department of Education seeking information about possible ED plans to use ISAs in federal higher education programs and expressing concern that ISAs create the potential for discriminatory practices.