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Examining the Impact of Income Share Agreements

Examining the Impact of Income Share Agreements. June 4, 2019. Today Show Video. https://www.today.com/video/how-isas-are-taking-strain-of-student-loan-debts-off-graduates-59476549823. Generally.

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Examining the Impact of Income Share Agreements

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  1. Examining the Impact of Income Share Agreements June 4, 2019

  2. Today Show Video • https://www.today.com/video/how-isas-are-taking-strain-of-student-loan-debts-off-graduates-59476549823

  3. Generally Legal agreements to “share” or remit a fixed percentage of future income in return for current funding ISAs are not loans Defined terms include income share %, term of agreement, minimum income threshold, and payment cap

  4. ISAs versus Loans Student is not a borrower ISA amount may never be repaid Not subject to loan-related obligations Flexible repayment Social responsibility component

  5. Deriving the Terms How do you come up with the various types of terms in ISAs? What factors are considered? Do the terms of an ISA differ by institution, program, student? Do you use an algorithm?

  6. Servicing

  7. Institutional versus Independent Funding What is the difference between ISAs funded by an institution of higher education and ISAs funded by an independent funding source? Is there a hybrid model?

  8. Criticism

  9. Legislation and Regulation Are there any federal or state consumer protection laws or regulations governing ISAs? • Not yet Are there any federal or state laws or regulations governing tax treatment of ISAs? • Not yet Any legislation pending in the Congress or the states? • Yes

  10. Education Department What do we know about ED’s use of the Experimental Sites Initiative (ESI) to encourage ISAs? New source of funds? Waiving applicability of statutes and regulations?

  11. Student Satisfaction • Appreciate the clarity of the transaction • Appreciate the transfer of risk • Appreciate the manageable payments

  12. Securitization

  13. Questions? Moderator Jonathan Vogel Vogel Law Firm PLLC jonathan.vogel@vogelpllc.com Panelists Andrew Davis Education Equity, Inc. adavis@educationinvestment.org Will Shaffner Missouri Higher Education Loan Authority wills@MOHELA.com

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