Common Contracts
1 similar null contracts
RE: Income Share Agreements and the DFPIDecember 19th, 2021
Income share agreements (ISAs) provide borrowers, often students, an advance of money in exchange for a percentage share of the borrower’s future income. Despite their growing contribution to student debt in the United States,1 the majority of ISA providers and servicers maintain that ISAs are not loans or consumer credit and thus not subject to consumer loan regulation.2 Recently, however, law enforcement at the state and federal level have affirmed scholars’ and advocates’ assertion that ISAs are loans.3 In August 2021, the California Department of Financial Protection and Innovation (DFPI) made clear its intent to treat ISAs as loans. Two new pieces of California legislation, the California Consumer Financial Protection Law (CCFPL) and the Student Borrower Bill of Rights (SBBR), give the DFPI new rulemaking and enforcement authority to regulate consumer loans, including ISAs. This memo outlines how the DFPI and the California legislature can use their authorities to protect borrower
