The Department of Education clarified this week that Income participation agreements in higher education are private loans. As a loan providers, companies that provide these agreements are regulated in different ways that before clarification, and schools have specific requirements in terms of how agreements promote.

Offer of agreements (or ISA). Students in advance financial support and, in return, require that they return part of their future Income during a number of years established. They are offered in some cases through schools and in other cases of companies. Some ISA providers have argued that they are not loans.

The Department of Education acted after the consumer's financial protection office in September issued an order for consent against a student loan originator for deceptive Borrowers on ISA, which is not required disclosures and Violation of the prohibition against anticipated sanctions for private education loans. The CFPB concluded in its order that the ISA of a student loan are private education loans. In addition, in January, the CFPB updated its examination procedures for loans for private students to explicitly refer to the ISAS. The action of the Department of Education this week applies essentially to govern all ISAS suppliers in higher education.

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