Great question. Our small team has put in extensive research and continues daily.
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First off, I'd like to point out that these contracts, referred to as "Income Share Agreements", lay in a gray area that may not be considered “lending” at all as it truly isn’t a loan. In the regulatory gray area, there are several possibilities in which it can be classified:
1) Similar to a Corporate Stock Issuance
2) Similar to a Joint Venture
3) Similar to Insurance
4) A traditional loan
5) A new vehicle entirely
Each of these has different implications for how the product will be positioned so this is a difficult question to answer in short. Vanderbilt has published good resource to look at for a broad overview if you are interested in taking a look yourself:
The regulatory environment surrounding these contracts is truthfully uncertain right now although there have been proposals that have been attempted in recent past (see: "investing in student success act of 2015" - https://www.congress.gov/bill/114th-congress/senate-bill/218...). Additionally, similar programs for income based repayment are in test for Oregon state schools as per the "Pay It Forward" tuition plan.
While there is absolutely regulatory uncertainty, we are able to use these existing frameworks to give us an insight into what regulators are looking for going forward. Truthfully, the lack of strict regulation can be seen as a positive as it allows us the freedom to carve the path so long as we stay within certain guidelines.
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Realistically with such a complex product we are aware that we will need to seek professional legal advice eventually. With that being said, feel free to reach out with specific questions as there is simply too much to cover here.
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First off, I'd like to point out that these contracts, referred to as "Income Share Agreements", lay in a gray area that may not be considered “lending” at all as it truly isn’t a loan. In the regulatory gray area, there are several possibilities in which it can be classified:
1) Similar to a Corporate Stock Issuance
2) Similar to a Joint Venture
3) Similar to Insurance
4) A traditional loan
5) A new vehicle entirely
Each of these has different implications for how the product will be positioned so this is a difficult question to answer in short. Vanderbilt has published good resource to look at for a broad overview if you are interested in taking a look yourself:
https://www.vanderbiltlawreview.org/wp-content/uploads/sites...
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The regulatory environment surrounding these contracts is truthfully uncertain right now although there have been proposals that have been attempted in recent past (see: "investing in student success act of 2015" - https://www.congress.gov/bill/114th-congress/senate-bill/218...). Additionally, similar programs for income based repayment are in test for Oregon state schools as per the "Pay It Forward" tuition plan.
While there is absolutely regulatory uncertainty, we are able to use these existing frameworks to give us an insight into what regulators are looking for going forward. Truthfully, the lack of strict regulation can be seen as a positive as it allows us the freedom to carve the path so long as we stay within certain guidelines.
--
Realistically with such a complex product we are aware that we will need to seek professional legal advice eventually. With that being said, feel free to reach out with specific questions as there is simply too much to cover here.