Last month we wrote a blog relating to a consent order entered into by the California Department of Financial Protection and Innovation (DFPI) with a servicer of income share agreements.  The DFPI determined that, despite claims by the provider to the contrary, the income share agreements are student loans that subject the provider to California’s licensing requirements.  It did not take long for the CFPB to enter the fray.  On September 7, the CFPB entered into a consent order with Better Future Forward, Inc. and various affiliates (collectively BFF) in which the CFPB determined that the company:

Continue Reading Are Income Share Agreements Loans? The CFPB Says Yes

On August 5, California’s Department of Financial Protection and Innovation (DFPI) announced that it entered into a consent order with a New York-based FinTech company that offers student Income Share Agreements (ISAs) to finance post-secondary education and training.  According to the DFPI, it is the first agreement to subject an ISA provider to state licensing and regulation.  The agreement reflects the DFPI’s decision to treat these private financing products as student loans for the purpose of the California Student Loan Servicing Act (SLSA).  Below are significant highlights from the agreement:

  • The DFPI found that the SLSA defines “student loans” broadly to include “any loan” or “extension of credit” and does not exclude contingent debt.
  • Under the ISAs, students agree to repay a school a fixed percentage of their future gross income after graduation, but only if the student is employed and making more than an agreed-upon amount.
  • The settlement provides that the DFPI will issue the company a conditional license under the SLSA based on its finding that ISAs are “student loans” for the purposes of the SLSA.


Continue Reading California Regulator Signals New Scrutiny of Student Lending Industry, Enters Into Consent Order with Servicer of Income Share Agreements