[bshanks]

I don't understand why an Income Sharing Agreement would be classified as loans. They seem more like equity than debt; the amount that students would pay depends on their future income, and can be arbitrarily small or large (right? or maybe I am misunderstanding the terms of these agreements).

I had thought that debt is when you have to pay back at least the "principal" no matter what, and equity is when the financier shares the risk of you failing. Maybe that's not correct, though?

Does the definition of a "loan" include any sort of financing, even if the amount that needs to be "paid back" to the "lender" can be arbitrarily small or large? That would make equity financing a special case of debt.

[inopinatus]

You can’t hold equity in a person, because that is slavery. All consumer liabilities are thus a form of debt. The characteristics that matter most are whether it is secured, the schedule of repayment, and the schedule of fees (interest being amongst the fees). Everything else is window dressing after those three parameters, and the label you stick on the box matters the least of all. Consequently, undischarged debt is indistinguishable from a loan, which is rather the CFPB’s point.

When push comes to shove, the substance of a thing matters much more than the attempt to relabel the thing.

[nusl]

You'd probably need to read the contract they make folk sign to get a real idea of why. It could be that the contract structures it like a loan.

[beej71]

(There was a cap on the ISA, so it wasn't arbitrarily large, but your points still stand.)

I was thinking the same thing. "Can you have a loan without principal?"

But reading through the documentation on this case, it seems like the legal answer is that you can.