Income Share Agreements (ISAs) are financing products that require students to pledge a portion of their future income in exchange for money to pay for college. ISAs have been touted by venture capitalists and Silicon Valley as a solution to the student debt crisis, but these products pose serious risks to students and could violate a number of federal and state laws.
The SBPC is working with partners to analyze and expose the potential harm ISAs may cause to borrowers and raise awareness among policymakers and institutions.
ISA Paper Series:
This paper series explores the role that consumer protection laws play in safeguarding borrowers from the harms posed by ISAs. Authored by legal experts at the forefront of consumer law, the papers look at how ISAs fit into the existing consumer financial protection framework, highlighting a strong legal foundation for policymakers and regulators as they seek to oversee these products and protect students.
ISA Work Spotlight:
The SBPC and NCLC urged the Federal Trade Commission to investigate Vemo Education, Inc. for unfair and deceptive business practices in its marketing and promotion of ISAs for students.
Before the ink had dried on 30 million Americans’ layoff notices, companies peddling ISAs were already trotting out crafty PR pitches, misleading marketing materials, and new predatory programs aimed at exploiting this crisis.
By Professor Adam Levitin: There’s good reason to think that some, if not all, ISAs involve a debt and are therefore “credit,” making them subject to the full panoply of federal consumer finance regulations.
ISAs in the News:
The groups say Vemo engages in deceptive marketing that could result in college students paying thousands of dollars in unexpected costs, and they are asking the FTC to order restitution for borrowers harmed by these alleged practices.
Despite marketing that claims ISAs are “not a loan,” lack an interest rate, and align the interests of the college and the student, ISAs operate like traditional private loans. They are often funded by private investors, require repayment in all but the most dire circumstances, and include draconian consequences for default.
The National Consumer Law Center and the Student Borrower Protection Center filed a complaint with the Federal Trade Commission on Monday, asking the agency to look into practices by Vemo Education, alleging the company provided potential customers with inaccurate information about its own and competitors’ products.