,,ii #aacth ,,congress #b;d ,session ,s4 #bbcj ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,april #i1 #bjad ,mr4 ,rubio introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to provide the legal framework necessary for the growth of innovative private financing options for students to fund postsecondary education1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,investing in ,student ,success ,act of #bjad4 ,i ,authorization of ,income ,share ,agreements #aja4 ,purpose2 lawfulness of instruments2 preemption of ,state law 7a7 ,purpose ,it is the purpose of this title to authorize individuals to enter into income share agreements for the purposes of obtaining funds in exchange for agreeing to pay to the holder of the contract a specified percentage of the individual's future income4 7b7 ,lawfulness of contracts2 preemption ,any income share agreement that complies with the requirements of section #ajb shall be a valid1 binding1 and enforceable contract notwithstanding any ,state law limiting or otherwise regulating assignments of future wages or other income4 #ajb4 ,terms and conditions of income share agreement contracts 7a7 ,definition of income share agreement ,for purposes of this title1 the term income share agreement means an agreement between an individual and any other person under which the individual commits to pay a specified percentage of the individual's future income1 for a specified period of time1 in exchange for payments to or on behalf of such individual for postsecondary education1 workforce development1 or other purposes4 7b7 ,terms and conditions of agreements ,an income share agreement complies with the requirements of this section if the contract complies with each of the following conditions3 7#a7 ,specified percentage of income ,an income share agreement shall specify the percentage of future income which the individual will be obligated to pay1 except that the contract shall exempt1 at a minimum1 the first #aj1jjj 7adjusted each year to reflect changes in the ,consumer ,price ,index for ,all ,urban ,consumers published by the ,bureau of ,labor ,statistics of the ,department of ,labor for the most recent #ab-month period for which such data are available7 of an individual's income when determining the individual's obligation for a given year4 7#b7 ,definition of income ,an income share agreement shall specify the definition of income to be used for purposes of calculating an individual's obligation under the contract4 7#c7 ,aggregate limitation on obligation ,no eligible individual may enter into any income share agreement if the total percentage of such individual's future income that the individual agrees to pay under that contract1 and any other income share agreements of such individual1 exceeds #ae percent of such future income4 7#d7 ,specified duration2 extension of period ,an income share agreement shall specify the maximum period of time during which the individual will be obligated to pay a portion of the individual's future income1 except that-- 7,a7 except as provided in subparagraph 7,b71 such period may not exceed #cfj months2 and 7,b7 such contract may provide that such period may be extended by the number of years during which the individual's income is below the exemption amount specified in the agreement under paragraph 7#a74 7#e7 ,early termination ,an income share agreement shall specify the terms and conditions by which the individual may extinguish the individual's obligations under the contract before the end of the payment period specified in the agreement1 based on the remaining term of such period4 7c7 ,required disclosures ,an income share agreement does not comply with the requirements of this section unless the individual who is committing to pay future income is provided1 before entry into such agreement1 a disclosure document that clearly and simply discloses that-- 7#a7 the agreement is not a debt instrument1 and that the amount the individual will be required to pay under the agreement-- 7,a7 may be more or less than the amount provided to the individual2 and 7,b7 will vary in proportion to the individual's future income2 7#b7 the obligations of the individual under the agreement are not dischargeable under bankruptcy law2 7#c7 whether the obligations of the individual under the agreement may be extinguished by accelerating payments1 and1 if so1 under what terms2 7#d7 the duration of the individual's obligations under the agreement 7absent such accelerating payments71 including any circumstances under which the contract would be extended2 7#e7 the percentage of income the individual is committing to pay and the amount of income that is exempt from the calculation of the individual's obligation2 and 7#f7 the definition of income to be used for purposes of calculating the individual's obligation4 7d7 ,noninterference ,an income share agreement shall not be construed to give the contract holder any rights over an individual's actions--it simply represents an obligation by the individual to pay the specific percentage of future income4 #ajc4 ,definitions ,as used in this title3 7#a7 ,state ,the term ,state includes1 in addition to the several ,states of the ,union1 the ,commonwealth of ,puerto ,rico1 the ,district of ,columbia1 ,guam1 ,american ,samoa1 the ,virgin ,islands1 the government of the ,northern ,mariana ,islands1 and the ,trust ,territory of the ,pacific ,islands4 7#b7 ,state law ,the term ,state law means any law1 decision1 rule1 regulation1 or other action having the effect of a law of any ,state or any political subdivision of a ,state1 or any agency or instrumentality of a ,state or political subdivision of a ,state1 except that a law of the ,united ,states applicable only to the ,district of ,columbia shall be treated as a ,state law 7rather than a law of the ,united ,states74 #ajd4 ,preemption of ,state ,law with respect to usury ,income share agreements shall not be subject to ,state usury laws4 ,,ii ,tax ,treatment of ,income ,share ,agreements #bja4 ,tax treatment of income share agreements 7a7 ,exclusion from gross income of income share agreement proceeds ,payments made under an income share agreement to or on behalf of the individual who commits to pay a specified percentage of such individual's future income to another person under such agreement shall not be includible in the gross income of such individual for purposes of the ,internal ,revenue ,code of #aihf4 7b7 ,treatment of payments of future income ,payments of future income received by another person under an income share agreement shall be treated for purposes of the ,internal ,revenue ,code of #aihf-- 7#a7 first1 with respect to so much of such payments as does not exceed the amount of the payments to which subsection 7a7 applies with respect to such agreement1 as a repayment of investment in the contract which reduces the holder's basis in such agreement1 and 7#b7 second1 as interest which is includible in gross income4 7c7 ,income share agreement ,for purposes of this title1 the term income share agreement has the meaning given such term under title ,i4 ,,iii ,qualified education loan #cja4 ,qualified education loan 7a7 ,in general ,paragraph 7#a7 of section #bba7;d7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following3 ,such term includes any income share agreement 7as defined in section #ajb of the ,investing in ,student ,success ,act of #bjad71 except that payments made by the taxpayer during the taxable year to meet an income share agreement obligation shall not be taken into account under subsection 7a74 7b7 ,information reporting not required ,subsection 7e7 of section #fjej,s of such ,code is amended by inserting 7without regard to the last sentence thereof7 after section #bba7;d77#a74 ,,iv ,federal ,individual ,assistance ,treatment of ,income ,share ,agreements #dja4 ,amounts received not treated as income in calculation of financial need under the ,higher ,education ,act of #aife ,no portion of any amounts received by an individual for entering into an income share agreement 7as such term is defined in title ,i7 shall be included as income or assets in the computation of expected family contribution for any program funded in whole or in part under the ,higher ,education ,act of #aife4 ,v ,investment ,company treatment #eja4 ,businesses making income share agreements excluded from investment company treatment ,section #c7;c7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#c7;c77 is amended-- 7#a7 in paragraph 7#d71 by inserting after industrial banking1 the following3 income share agreements 7as defined under section #ajb of the ,investing in ,student ,success ,act of #bjad712 and 7#b7 in paragraph 7#e71 by inserting 1 including income share agreements after services each place such term appears4