[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2114 Introduced in Senate (IS)]
<DOC>
116th CONGRESS
1st Session
S. 2114
To provide the legal framework and income tax treatment necessary for
the growth of innovative private financing options, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 15, 2019
Mr. Young (for himself, Mr. Warner, Mr. Rubio, and Mr. Coons)
introduced the following bill; which was read twice and referred to the
Committee on Finance
_______________________________________________________________________
A BILL
To provide the legal framework and income tax treatment necessary for
the growth of innovative private financing options, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``ISA Student
Protection Act of 2019''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
TITLE I--TAX TREATMENT OF A QUALIFIED ISA
Sec. 101. Tax treatment of proceeds and payments of future income.
Sec. 102. Terms and conditions of Qualified ISAs.
Sec. 103. Rulemaking; model disclosure forms.
Sec. 104. Truth in Lending Act.
Sec. 105. Consent to continuing release of taxpayer information under
Qualified ISAs and income-share agreements.
TITLE II--TREATMENT OF A QUALIFIED ISA UNDER STATE LAW
Sec. 201. Lawfulness of contracts; preemption of State law.
Sec. 202. Preemption of State law with respect to usury.
Sec. 203. Preemption of pre-existing State laws with respect to
ability-to-repay and licensing laws.
TITLE III--FEDERAL INDIVIDUAL ASSISTANCE TREATMENT OF A QUALIFIED ISA
Sec. 301. Proceeds not treated as income in calculation of financial
need under the Higher Education Act of
1965.
TITLE IV--TREATMENT UNDER SECURITIES LAWS
Sec. 401. Qualified ISAs not treated as securities.
Sec. 402. Businesses making Qualified ISAs excluded from investment
company treatment.
TITLE V--TREATMENT UNDER FEDERAL CONSUMER FINANCE LAWS
Sec. 501. Qualified ISA anti-discrimination protections.
Sec. 502. Prohibition on requiring preauthorized electronic fund
transfers.
Sec. 503. Treatment under the Fair Credit Reporting Act.
Sec. 504. Application of the Fair Debt Collection Practices Act.
Sec. 505. Application of the Military Lending Act.
Sec. 506. Application of the Servicemembers Civil Relief Act.
Sec. 507. Rulemaking.
TITLE VI--TREATMENT UNDER OTHER LAWS
Sec. 601. Insurance and wagering.
Sec. 602. Payments not considered prepayments.
TITLE VII--REPORTING REQUIREMENT FOR THE BUREAU OF CONSUMER FINANCIAL
PROTECTION
Sec. 701. Report.
SEC. 2. DEFINITIONS.
For purposes of this Act:
(1) Comparable loan.--The term ``comparable loan'' means,
with respect to a Qualified ISA, a loan that--
(A) has an original principal amount such that,
after any origination fees on the loan are paid, the
amount of loan financing received by the individual is
equal to the total amount of funding provided under the
Qualified ISA to or on behalf of the individual subject
to the Qualified ISA;
(B) has the same disbursement or funding date,
payment start date, and number of required monthly
payments; and
(C) is fully amortized over such term with monthly
payments of principal and interest.
(2) Income-share agreement.--The term ``income-share
agreement'' means an agreement--
(A) between an individual and an ISA funder;
(B) under which--
(i) the ISA funder credits towards the
tuition or other obligations of, or pays
amounts to, or on behalf of, such individual
for costs associated with a postsecondary
training program, or any other program designed
to increase the individual's human capital,
employability, or earning potential (and not
limited to programs eligible to participate as
programs under title IV of the Higher Education
Act of 1965 (20 U.S.C. 1070 et seq.)); and
(ii) such individual pays to such ISA
funder (or the ISA funder's successor in
interest) income-share payments for a defined
term; and
(C) is not a loan.
(3) Income-share funding.--The term ``income-share
funding'' means--
(A) costs associated with a postsecondary training
program, or any other program designed to increase the
individual's human capital, employability, or earning
potential (and not limited to programs eligible to
participate as programs under title IV of the Higher
Education Act of 1965 (20 U.S.C. 1070 et seq.)); and
(B) an allowance for books, supplies,
transportation, and miscellaneous personal expenses,
including a reasonable allowance for--
(i) the documented rental or purchase of a
personal computer; or
(ii) the refinancing of debt used for the
costs described in this subparagraph.
(4) Income-share payment.--The term ``income-share
payment'' means an amount equal to a specified percentage of
the future income of an individual.
(5) ISA funder.--With respect to a Qualified ISA, the term
``ISA funder'' means the party to the Qualified ISA who--
(A) credits towards the tuition or other
obligations of, or pays amounts to, or on behalf of, an
individual solely for the purposes specified in
paragraph (3)(A)(i); and
(B) has the right to receive a specified percentage
of the individual's future income.
(6) Qualified isa.--The term ``Qualified ISA'' means an
agreement between an individual and an ISA funder that--
(A) is not a loan, but is an income-share agreement
under which--
(i) the ISA funder credits towards the
tuition or other obligations of, or pays
amounts to, or on behalf of, such individual
for income-share funding; and
(ii) such individual pays to such ISA
funder (or the ISA funder's successor in
interest); and
(B) meets the requirements of subsections (a) and
(b) of section 102.
(7) State.--The term ``State'' means the several States of
the United States, the Commonwealth of Puerto Rico, the
District of Columbia, Guam, American Samoa, the Virgin Islands,
the government of the Northern Mariana Islands, and the Trust
Territory of the Pacific Islands.
(8) State law.--The term ``State law'' means--
(A) any law, decision, rule, regulation, or other
action having the effect of a law of any State or any
political subdivision of a State, or any agency or
instrumentality of a State or political subdivision of
a State; and
(B) any law of the United States applicable only to
the District of Columbia.
TITLE I--TAX TREATMENT OF A QUALIFIED ISA
SEC. 101. TAX TREATMENT OF PROCEEDS AND PAYMENTS OF FUTURE INCOME.
For purposes of the Internal Revenue Code of 1986:
(1) Funding excluded from gross income.--In the case of an
individual, gross income shall not include the amount of any
income-share funding that is credited toward the tuition or
other obligations of, or paid to or on behalf of, such
individual under a Qualified ISA.
(2) Difference in repayment not included as gross income.--
In the case of a Qualified ISA under which the income-share
funding exceeds the total income-share payments (in any period
over the life of the contract), the individual's gross income
shall not include the amount of such excess.
(3) Treatment of payments of future income.--The amount of
any income-share payments under a Qualified ISA shall be
treated--
(A) first, with respect to so much of such amount
as does not exceed the income-share funding under such
Qualified ISA, as a recovery of investment (with a
corresponding reduction in basis) in the contract; and
(B) second, as income on the contract which is
includible in gross income.
SEC. 102. TERMS AND CONDITIONS OF QUALIFIED ISAS.
(a) Terms and Conditions.--Each Qualified ISA shall comply with the
following:
(1) Specified percentage of income.--
(A) In general.--The Qualified ISA specifies the
percentage of future income required to be paid.
(B) Maximum percentage.--The maximum percentage of
income an individual would be required to pay under the
Qualified ISA shall not exceed 20 percent, and the
product of such percentage and the number of monthly
payments required under the Qualified ISA divided by 12
shall not exceed 2.25 (which figure is the product of
7.5 percent and the number of years in the longest
allowable contract under paragraph (4)(A)).
(2) Definition of income.--The Qualified ISA specifies the
definition of income to be used for purposes of calculating an
individual's obligation to pay under the Qualified ISA, which--
(A) shall not in any case include the income of the
individual's children;
(B) shall not include--
(i) any amount paid to the individual under
title II or XVI of the Social Security Act (42
U.S.C. 401 et seq., 1381 et seq.) or under a
State program funded title IV under of such Act
(42 U.S.C. 601 et seq.); or
(ii) any amount received by the individual
under the Child Nutrition Act of 1966 (42
U.S.C. 1771 et seq.);
(C) shall include revenue sources primarily
incurred from an individual's employment; and
(D) may include another revenue source besides
employment if an individual has voluntarily chosen to
not seek employment and is still receiving significant
revenue from another source.
(3) Affordability for low after-school income.--
(A) In general.--The Qualified ISA provides that
when an individual subject to the Qualified ISA has an
income that is equal to or below the threshold amount
described in subparagraph (B), the percentage of income
obligation for the individual is zero.
(B) Threshold amount.--The threshold amount under
this subparagraph is an amount equal to (or at the
option of the ISA funder, greater than)--
(i) 200 percent of the poverty line for a
single person (as defined in section 673 of the
Community Services Block Grant Act (42 U.S.C.
9902)); or
(ii) in the case of a Qualified ISA entered
into before January 1, 2020, 150 percent of
such poverty line for a single person.
(C) Allowance of fees or nominal payments.--
Subparagraph (A) shall not be interpreted to preclude
the charging of fees or nominal payments (as described
in paragraph (8)) during this period.
(4) Specified duration; extension of period.--
(A) Duration.--The Qualified ISA specifies the
maximum period of time during which the individual will
be obligated to make a specified number of monthly
payments of a percentage of the individual's future
income (excluding periods when just a nominal payment
(as described under paragraph (8)) is required), which
may not (except as provided in subparagraph (B)) exceed
360 months.
(B) Extension of period.--The Qualified ISA may
provide for the extension of such period by the number
of months during which the individual's percentage of
income obligation (excluding nominal payments and fees)
was zero.
(5) Early termination.--The Qualified ISA specifies the
terms and conditions under which the individual subject to the
agreement may terminate the agreement.
(6) Appropriate risk sharing.--The payments required under
the Qualified ISA for an individual with income during the
payment term that is less than or equal to 225 percent of the
poverty line for a single person (as defined in section 673 of
the Community Services Block Grant Act (42 U.S.C. 9902)) shall
not exceed the payments on a comparable loan that bears
interest at a rate less than or equal to the annual percentage
rate of interest limitation under section 987(b) of title 10,
United States Code.
(7) Aggregate limitation on obligation.--The Qualified ISA
provides that the total percentage of future income of the
individual that the individual agrees to pay, under the current
Qualified ISA and any other Qualified ISAs previously entered
into by the individual, shall not exceed 20 percent.
(8) Nominal payments.--The Qualified ISA specifies any
nominal monthly payment that is required during periods when
the individual subject to the Qualified ISA has no percentage
of income obligation, except that--
(A) such nominal monthly payment shall not exceed
twenty-five dollars per month (adjusted each year to
reflect changes in the Consumer Price Index for All
Urban Consumers published by the Bureau of Labor
Statistics of the Department of Labor for the most
recent 12-month period for which the data are
available); and
(B) the total number of nominal payments that may
be required shall not exceed the maximum number of
allowable payments described in paragraph (4)(A).
(9) Protections.--
(A) In general.--The Qualified ISA specifies, at a
minimum, individual rights with respect to each of the
following:
(i) Default or delinquency.
(ii) Overpayment or underpayment.
(iii) Disability.
(iv) Death.
(v) Service as a member of the armed
services (including the National Guard and
Reserves).
(B) Prior isas.--If a Qualified ISA executed prior
to the date of enactment of this Act does not meet the
requirements in subparagraph (A), the ISA funder shall
come into compliance with such subparagraph by issuing,
not later than 180 days after the date of enactment of
this Act, an addendum to the Qualified ISA that
contains the information described in such
subparagraph.
(b) Required Disclosures.--
(1) In general.--An ISA funder of a Qualified ISA shall
provide, to any individual intending to commit under a
Qualified ISA to pay future income and before the individual
enters into the agreement under the Qualified ISA, a written
document that clearly and simply discloses--
(A) that the Qualified ISA is not credit or a loan,
and that the amount the individual will be required to
pay under the Qualified ISA--
(i) may be more or less than the amount
provided to the individual pursuant to the
Qualified ISA; and
(ii) will vary in proportion to the
individual's future income;
(B) that the obligations of the individual under
the Qualified ISA are dischargeable under bankruptcy
law;
(C) a description of the terms in which the
obligations of the individual under the Qualified ISA
shall be extinguished in advance of full duration of
the agreed-to term;
(D) the duration of the individual's obligations
under the Qualified ISA (absent such extinguishment),
including any circumstances under which the duration of
the Qualified ISA would be extended or extinguished;
(E) the percentage of income the individual is
committing to pay under the Qualified ISA, including
whether the percentage of income is fixed or variable
under the Qualified ISA, and the minimum amount of
annual income that triggers the individual's obligation
under the Qualified ISA to make payments for such year;
(F) the definition of income to be used for
purposes of calculating the individual's obligation
under the Qualified ISA;
(G)(i) a comparison of--
(I) the amounts and number of payments an
individual would be required to pay under the
Qualified ISA at a range of annual income
levels, which income levels shall correspond to
the levels the individual might reasonably be
expected to make given the intended use of the
funds provided under the Qualified ISA, as
determined in accordance with guidance issued
by the Director of the Bureau of Consumer
Financial Protection; to
(II) the amounts and number of payments
required to be paid under one or more
comparable loans, including, at a minimum--
(aa) a loan at a fixed or variable
interest rate and with a number of
payments determined by the Director of
the Bureau of Consumer Financial
Protection to be an approximation of
the fixed or variable interest rate
available to student loan borrowers in
the private marketplace; and
(bb) a comparable Federal Direct
PLUS loan under part D of title IV of
the Higher Education Act of 1965 (20
U.S.C. 1087a et seq.), if the
individual would be eligible for such a
loan; and
(ii) a prominent notice accompanying the comparison
that clearly and conspicuously advises that loan
payments may be required regardless of the income of an
individual;
(H) income verification documentation, including
personal tax records submitted to the Internal Revenue
Service, that the individual may be required to provide
under the Qualified ISA;
(I) intent to conduct annual reconciliation
relating to obligations owed by the individual under
the Qualified ISA; and
(J) any nominal payments, as described in
subsection (a)(8), required under the Qualified ISA.
(2) No other material terms.--The Qualified ISA disclosures
required by paragraph (1) shall be provided in a clear and
conspicuous manner, and shall not be disclosed together with
any other material terms or conditions that may be applicable
to the Qualified ISA.
(c) Non-Interference.--A Qualified ISA represents an obligation by
the individual to pay the specific percentage of future income, but
shall not be construed to give the contract holder any rights over an
individual's actions other than as provided in this Act.
(d) Effect of Failure To Provide Documentation.--
(1) In general.--Absent income documentation from an
individual under a Qualified ISA, the ISA funder of such
Qualified ISA (or the funder's successor in interest) may
assume a certain monthly income level for the individual, up to
the greater of--
(A) the level that would create an obligation that
is approximately equal to the amount required to return
the initial Qualified ISA amount to the ISA funder over
the remaining required payments; or
(B) the average monthly income for the individual
from the previous 6 months of employment.
(2) Treatment under state law.--Any obligation resulting
from an assumed income level under paragraph (1) shall not be
considered to be imposing an unlawful fee under a State law
unless such State law expressly states that it is intended to
apply to Qualified ISAs.
(3) Verification of income.--If an individual supplies an
ISA funder (or the funder's successor in interest) with the
individual's income verification information within 180 days of
the ISA funder (or the funder's successor in interest) assuming
an income level for such individual under paragraph (1), the
individual shall be entitled to have any payments that were
made in excess of the individual's actual obligation under the
contract either refunded to the individual or credited to
future obligations under the Qualified ISA.
SEC. 103. RULEMAKING; MODEL DISCLOSURE FORMS.
(a) No Bureau General Rulemaking Authority.--Except as provided
under subsection (b) and section 102(b)(1)(G), the Director of the
Bureau of Consumer Financial Protection may not issue regulations under
this title or pursuant to any other authority granted to the Bureau of
Consumer Financial Protection under the Dodd-Frank Wall Street Reform
and Consumer Protection Act (Public Law 111-203).
(b) Model Disclosure Forms.--
(1) In general.--Not later than 180 days after the date of
the enactment of this Act, the Director of the Bureau of
Consumer Financial Protection, after engaging in appropriate
consumer testing of such forms, shall promulgate a model
disclosure form for the disclosures required under section
102(b).
(2) Safe harbor.--Any person who uses the model disclosure
form promulgated pursuant to paragraph (1) and includes
accurate information required under section 102(b) shall be
deemed to be in compliance with the disclosure requirements
under section 102(b) and shall not be subject to any State law
(including regulations) to the extent that such law imposes any
additional or differing disclosure requirements.
SEC. 104. TRUTH IN LENDING ACT.
Any Qualified ISA shall not be considered credit and ISA funders
(and their successors in interest) shall not be considered creditors,
as those terms are defined in section 103 of the Truth in Lending Act
(15 U.S.C. 1602).
SEC. 105. CONSENT TO CONTINUING RELEASE OF TAXPAYER INFORMATION UNDER
QUALIFIED ISAS AND INCOME-SHARE AGREEMENTS.
By not later than 180 days after the date of enactment of this Act,
the Secretary of the Treasury shall modify Treasury Regulations and
guidance to provide for continuing consent to disclosure of an
individual's return information to an ISA funder (or the funder's
successor in interest) under a Qualified ISA or income-share agreement,
but only for periods relevant to, and only to the extent the Secretary
determines is necessary and appropriate in carrying out the terms of,
such Qualified ISA or income-share agreement.
TITLE II--TREATMENT OF A QUALIFIED ISA UNDER STATE LAW
SEC. 201. LAWFULNESS OF CONTRACTS; PREEMPTION OF STATE LAW.
(a) In General.--A Qualified ISA shall be a valid, binding, and
enforceable contract notwithstanding any State law limiting or
otherwise regulating assignments of future wages or other income.
(b) Good Faith Reliance.--An ISA funder may rely in good faith on a
statement from the individual obligated by a Qualified ISA with respect
to such individual's aggregate obligation on the Qualified ISA.
SEC. 202. PREEMPTION OF STATE LAW WITH RESPECT TO USURY.
A Qualified ISA shall not be subject to State law with respect to
usury, credit, loans, or credit or installment sales, unless such State
law expressly states that it is intended to apply to Qualified ISAs.
SEC. 203. PREEMPTION OF PRE-EXISTING STATE LAWS WITH RESPECT TO
ABILITY-TO-REPAY AND LICENSING LAWS.
A Qualified ISA shall not be subject to a State law with respect to
``ability-to-repay'' requirements, and neither an ISA funder issuing a
Qualified ISA, its successor in interest, nor any entity servicing any
Qualified ISA on behalf of an ISA funder or its successor interest,
shall be subject to any State law with respect to ISA licensing or
registration, unless such State law was issued after the date of the
enactment of this Act and such State law expressly states that it is
intended to apply to Qualified ISAs.
TITLE III--FEDERAL INDIVIDUAL ASSISTANCE TREATMENT OF A QUALIFIED ISA
SEC. 301. PROCEEDS NOT TREATED AS INCOME IN CALCULATION OF FINANCIAL
NEED UNDER THE HIGHER EDUCATION ACT OF 1965.
No portion of any amounts received by an individual for entering
into a Qualified ISA or an income-share agreement shall be included as
income or assets in the computation of expected family contribution for
any program funded in whole or in part under the Higher Education Act
of 1965 (20 U.S.C. 1001 et seq.).
TITLE IV--TREATMENT UNDER SECURITIES LAWS
SEC. 401. QUALIFIED ISAS NOT TREATED AS SECURITIES.
A Qualified ISA and an income-share agreement shall not be treated
as a security for purposes of the securities laws (as defined in
section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a))), any similar State law, or any State law that directly or
indirectly prohibits, limits, or imposes conditions, based on the
merits of an offering or issuer of securities, upon the offer or sale
of any security. Nothing in the preceding sentence may be construed to
prevent an instrument that is collateralized by, or serviced by the
cash flows of, a Qualified ISA from being treated as a security for
purposes of any law described in that sentence.
SEC. 402. BUSINESSES MAKING QUALIFIED ISAS EXCLUDED FROM INVESTMENT
COMPANY TREATMENT.
Section 3(c) of the Investment Company Act of 1940 (15 U.S.C. 80a-
3(c)) is amended--
(1) in paragraph (4), by inserting ``Qualified ISAs or
income-share agreements (as those terms are defined in section
2 of the ISA Student Protection Act of 2019),'' after
``industrial banking,''; and
(2) in paragraph (5)--
(A) by inserting ``, including purchasing or
otherwise acquiring Qualified ISAs or income-share
agreements (as those terms are defined in section 2 of
the ISA Student Protection Act of 2019)'' after
``services'' the first place it appears; and
(B) by inserting ``, including making Qualified
ISAs or income-share agreements (as so defined)'' after
``services'' the second place it appears.
TITLE V--TREATMENT UNDER FEDERAL CONSUMER FINANCE LAWS
SEC. 501. QUALIFIED ISA ANTI-DISCRIMINATION PROTECTIONS.
The Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.) is
amended--
(1) in section 701(b) (15 U.S.C. 1691(b))--
(A) in the matter preceding paragraph (1), by
inserting ``or an ISA funder or its successor in
interest'' after ``creditor'';
(B) in paragraph (4), by striking ``or'' at the
end;
(C) in paragraph (5), by striking the period at the
end and inserting ``; or''; and
(D) by adding at the end the following:
``(6) to set the terms of a Qualified ISA or an income-
share agreement (as those terms are defined in section 2 of the
ISA Student Protection Act of 2019), based on the earnings
reasonably anticipated by the creditor with respect to any
program of study, certificate program, degree program, or
institutions of higher education where a Qualified ISA is
offered.''; and
(2) in section 702 (15 U.S.C. 1691a)--
(A) in subsection (d), by inserting ``, or the
right granted under a Qualified ISA or an income-share
agreement (as those terms are defined in section 2 of
the ISA Student Protection Act of 2019)'' before the
period at the end; and
(B) in subsection (e)--
(i) by striking ``or any assignee'' and
inserting ``any assignee''; and
(ii) by inserting ``or any person who
regularly extends, renews, or continues funding
under a qualified ISA or an income-share
agreement (as those terms are defined in
section 2 of the ISA Student Protection Act of
2019)'' before the period at the end.
SEC. 502. PROHIBITION ON REQUIRING PREAUTHORIZED ELECTRONIC FUND
TRANSFERS.
Section 913(1) of the Electronic Fund Transfer Act (15 U.S.C.
1693k(1)) is amended by inserting ``or the entering into a Qualified
ISA or an income-share agreement (as those terms are defined in section
2 of the ISA Student Protection Act of 2019) with a consumer'' after
``a consumer''.
SEC. 503. TREATMENT UNDER THE FAIR CREDIT REPORTING ACT.
(a) In General.--Section 605 of the Fair Credit Reporting Act (15
U.S.C. 1681c) is amended by adding at the end the following:
``(i) Qualified ISA Information.--With respect to a Qualified ISA
or an income-share agreement (as those terms are defined in section 2
of the ISA Student Protection Act of 2019), a consumer report made by a
consumer reporting agency--
``(1) may include a description of the contract terms of
the Qualified ISA or income-share agreement, as applicable,
and, subject to subsection (a), information with respect to
amounts that are owed under the Qualified ISA; and
``(2) may not include any speculation about future amounts
that may be owed under the Qualified ISA or income-share
agreement, as applicable.''.
(b) Regulations.--The Director of the Bureau of Consumer Financial
Protection shall promulgate regulations with respect to the manner in
which ISA funders may furnish, and consumer reporting agencies may
report, information regarding Qualified ISAs and income-share
agreements.
SEC. 504. APPLICATION OF THE FAIR DEBT COLLECTION PRACTICES ACT.
(a) In General.--Section 803 of the Fair Debt Collection Practices
Act (15 U.S.C. 1692a) is amended--
(1) in paragraph (5), by inserting ``, including a
Qualified ISA and an income-share agreement, as those terms are
defined in section 2 of the ISA Student Protection Act of
2019'' before the period at the end; and
(2) in paragraph (6), in the first sentence, by inserting
``, including an ISA funder, as defined in section 2 of the ISA
Student Protection Act of 2019,'' after ``means any person''.
(b) Rule of Construction.--Nothing in this section, or the
amendments made by this section, may be construed for purposes of any
other Federal law as considering--
(1) Qualified ISAs or income-share agreements as debts; or
(2) ISA funders as debt collectors.
SEC. 505. APPLICATION OF THE MILITARY LENDING ACT.
Section 987 of title 10, United States Code, is amended--
(1) by redesignating subsection (i) as subsection (j); and
(2) by inserting after subsection (h) the following new
subsection:
``(i) Treatment of Qualified ISAs and Income-Share Agreements.--The
Secretary of Defense shall issue regulations to apply this section to
Qualified ISAs and income-share agreements (as those terms are defined
in section 2 of the ISA Student Protection Act of 2019), and a
Qualified ISA and an income-share agreement shall be deemed to meet the
annual percentage rate of interest limitation under subsection (b) if
the Qualified ISA or income-share agreement, as applicable, would meet
the requirements of section 102(a)(6) of such Act (related to
appropriate risk sharing) but with reference to the rate specified in
subsection (b).''.
SEC. 506. APPLICATION OF THE SERVICEMEMBERS CIVIL RELIEF ACT.
Section 207 of the Servicemembers Civil Relief Act (50 U.S.C. 3937)
is amended by adding at the end the following:
``(f) Treatment of Qualified ISAs and Income-Share Agreements.--The
Secretary of Defense shall issue regulations to apply this section to
Qualified ISAs and income-share agreements (as those terms are defined
in section 2 of the ISA Student Protection Act of 2019), specifically
by stating that a Qualified ISA and an income-share agreement shall be
considered to have met the requirements of this section if the
Qualified ISA or income-share agreement, as applicable, would meet the
requirements of section 102(a)(6) of such Act (relating to appropriate
risk sharing) but with reference to the rate specified in subsection
(a)(1).''.
SEC. 507. RULEMAKING.
Not later than 180 days after the date of enactment of this Act--
(1) the Director of the Bureau of Consumer Financial
Protection, in consultation with such other agency heads as the
Director considers appropriate, shall issue regulations to
carry out the amendments made by sections 501, 502, and 503;
and
(2) the Secretary of Defense shall issue regulations to
carry out the amendments made by sections 505 and 506.
TITLE VI--TREATMENT UNDER OTHER LAWS
SEC. 601. INSURANCE AND WAGERING.
A Qualified ISA and an income-share agreement shall not be treated
as a contract for insurance or a betting or wagering contract under any
Federal or State law.
SEC. 602. PAYMENTS NOT CONSIDERED PREPAYMENTS.
With respect to a Qualified ISA or an income-share agreement, any
requirement that an individual pay an amount greater than the income-
share funding in order to extinguish the Qualified ISA obligation or
income-share agreement, as applicable, earlier than the end of the term
shall not be subject to any Federal or State law with respect to
prepayment penalties.
TITLE VII--REPORTING REQUIREMENT FOR THE BUREAU OF CONSUMER FINANCIAL
PROTECTION
SEC. 701. REPORT.
Not less than frequently than once every 5 years, the Director of
the Bureau of Consumer Financial Protection shall submit to Congress a
report that includes--
(1) information on the prevalence and utilization of
Qualified ISAs and income-share agreements; and
(2) any other information pertaining to Qualified ISAs and
income-share agreements that the Director determines is
appropriate.
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