Young, Polis Introduce Bill to Provide Innovative Way to Finance Higher Education Bill

Statement

Rep. Jared Polis (D-CO) and Rep. Todd Young (R-IN) today introduced a bipartisan bill that would help provide more affordable student loan options. The Investing in Student Success Act of 2015 provides the legal certainty for an innovative type of funding mechanism, called Income Share Agreements (ISAs), that can help students more easily finance a college degree, while including important consumer protections.

Under an ISA, a student receives private funds in exchange for agreeing to pay an affordable percentage of his or her income for a set period of time after school. And, unlike a loan, an ISA has no principal or interest; instead, an ISA bases a student's payments on income, and funders only recoup their money when students are successful.

"A college degree is one of the best investments a student can make," Polis said. "Unfortunately, many students are burdened with record levels of debt because of it, often forcing them to delay other important investments in their future, like saving for retirement or purchasing a home. Income share agreements are an innovative, alternative way to finance an education. Our bill provides the necessary legal certainty for students to take advantage of this option, while at the same time giving students the consumer protections they deserve."

"The class of 2015 will graduate with the most student loan debt in United States' history," Young said. "Many fear that student loan debt will be the next bubble to burst yet not enough is being done to address the affordability problem. This bill is the culmination of a years-long effort working with universities like Purdue, on a real market-driven solution that's not only good for students, but good for American taxpayers whose tax-dollars aren't involved and at risk. "

A small group of companies and nonprofits have attempted to offer ISAs but have struggled to grow because of legal and regulatory uncertainty. The Polis-Young bill would provide a much-needed framework to support these loan options.

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