Senate lawmakers on Tuesday announced a law they say will spur the growth of income-equity agreements, private alternatives to student loans that require employees to repay some of their future income. 2. any other information concerning qualified ESAs and income-participation agreements that the Director considers appropriate. There is concern that private schools, in particular, may increase the price of tuition and fees, given that students have a virtually unlimited money supply through private lenders that offer income-taking agreements. However, some consumer advocates argue that the rules applicable to financial products already apply to income-participation agreements. And Democrats, including Massachusetts Senator Elizabeth Warren, have warned that financial instruments present common pitfalls for private student credit with „additional risk of misleading rhetoric and marketing.“ Since investors have an incentive to allow students to pay lower percentages of their income when enrolling in quality and inexpensive educational programs, ASAS contribute to a more efficient allocation of financial resources among higher education institutions.  In contrast, income-participation agreements give schools a skin. This has the potential to give schools increased financial incentives to prioritize student outcomes, such as engagement, graduation, placement, and a high salary level after graduation. After all, education providers are more likely to help students graduate and get good jobs when they are paid so.
Many colleges and universities conduct assessments of their programs based on student learning outcomes in order to be worthy of their accrediting bodies. Income participation agreements promote even more transparency, as students need positive outcomes from their colleges and universities to get a job that helps pay for their post-graduate income participation agreement. Students most in need of educational funding (including low-income students, minorities, and first-generation students) typically have limited social capital, such as family networks and career mentors, which are often critical to success in the job market. ISAs, which are complemented by career development, offer a good way to overcome such constraints.   However, this expansion also exposes the same students to a market that, until it is regulated, remains vulnerable to abuse. Legislation that establishes guardrails in the emerging area of the revenue participation agreement is essential to ensure a healthy Isaian market that can serve more students. Income participation agreements allow a student to pay for their university education at the back end of their training with their own income, rather than at the front of their training with borrowed money that incurs interest charges. [investors] could „buy“ a share of a person`s income prospects: to provide them with the funds needed to finance their training, provided they agree to pay the lender a certain fraction of their future income. . . .