Students most in need of education funding (including low-income, minority and first-generation students) generally have limited social capital, such as family networks and career mentors, which are often essential to labour market success. ISAs, which are complemented by career development, offer a good way to overcome these constraints.   However, critics argue that income-participation agreements could favour students who are likely to earn higher incomes by not offering students in lower-paid sectors the opportunity for students to pay far more than standard education, and that the ability of private investors to finance ISAs can create new risks for students and institutions. Some fear that ISAs will have the effect of « creaming » the best students and funding only elite institutions. However, ISAs should theoretically fund all economically viable programs (i.e., the future income of their graduates is proportional to the cost of the degree), so the only way that could be true is that the vast majority of institutions are not economically viable.  The bill sets a minimum income (200% of the federal poverty line) below which ISA beneficiaries would not have to make payments based on a percentage of their income. For beneficiaries with incomes below 225% of the poverty line, monthly payments must not exceed the monthly payment requirement for a comparable loan with an annual percentage of 36%. Social security pensions, survivors and disability benefits; Additional Security Income (SSI); And amounts received under the 1966 Child Nutrition Act, such as the National School Lunch Program and the Women, Infants and Children (WIC) program, would not be included as income in the calculation of the monthly payment. However, one provision specifies that income from non-employment sources can be considered income for determining ISA payment amounts for people who choose not to work and who have a significant source of income for inactive purposes. A maximum monthly payment of $25 would be permitted if the recipient`s income is less than the minimum value set for the requirement for an income-based payment. In the United Kingdom, this type of agreement has been definitively approved by the FCA (UK Financial Regulator) under a single legal framework.
So far, StepEx is the only company to be a regulated ISA provider and to use funds from major UK financial institutions. ISAs are currently only available in the UK for postgraduate degrees in the professional fields of major universities. It is a broader and more affordable alternative to debt for the financing of post-graduate students.  But some consumer advocates argue that the rules for financial products already apply to revenue-participation agreements. And Democrats, including Massachusetts Sen. Elizabeth Warren, warned that financial instruments carry common pitfalls for private student loans with « additional risk of rhetoric and fallacious marketing. » Senator Marco Rubio (R-Florida) and Congressman Tom Petri (R-Wisconsin) introduced accompanying legislation in the Senate and House of Representatives today that would provide legal clarification on private market income equity agreements, a form of financing in which investors finance students in exchange for a percentage of the student`s future income for a period of time.