Student Borrowers Claim Victory in Consumer Bureau Action

Income Share Agreements Pose Serious Risks to Students

Today, the Consumer Financial Protection Bureau announced an enforcement action against a private student lender offering a risky kind of financial product known as an income share agreement (ISA), alleging that the company, Better Future Forward, Inc. was misleading consumers. This action marks the first public federal enforcement action against an Income Share Agreement provider and sets the stage for increased regulatory scrutiny of the ISA industry. Earlier this month, the California Department of Financial Protection and Innovation announced the first public enforcement action by a state regulator against an ISA provider.

In response to today’s action, the Student Borrower Protection Center released the following statement:

“The CFPB’s action shows that no private student lender is above the law. Despite industry attempts to evade consumer protections, federal law is clear — income share agreements have always been a form of consumer credit and all borrowers are entitled to the same rights and protections, regardless of whether they took out an ISA engineered by Silicon Valley or a traditional loan from a big bank.

Nearly every aspect of the ISA model harms consumers and is illegal: from the discriminatory impact on women and borrowers of color, to the predatory interest rates, the tricks and traps designed to lure vulnerable borrowers into high-cost debt. Now is the time for…