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

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 Generally

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

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?

Servicing Who services ISAs? How do you service ISAs? How is it similar to and different from loan servicing? Servicing

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?

Criticism Indentured servitude Students could end up paying too much Places too much pressure on students Certain programs become less attractive Harmful impact on federal loan program

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? Any legislation pending in the Congress or the states? Yes

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?

Student Satisfaction Appreciate the clarity of the transaction Appreciate the transfer of risk Appreciate the manageable payments

Securitization Can ISAs be securitized? How does that work? What are the risks and benefits?

Moderator Jonathan Vogel Vogel Law Firm PLLC jonathan. vogel@vogelpllc 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 Questions?