,,ii  #aaeth ,,congress  #ast ,session  
,s4 #bfh  ,,in ,,the ,,senate ,,of ,,the
 ,,united ,,states  ,february #a1       
#bjag,mr4 ,young 7for himself and ,mr4  
,rubio7 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 #bjag4  #b4   
,definition ,in this ,act1 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 future income of the individual1   
for a specified period of time1 in      
exchange for payments to or on behalf of
 the individual for postsecondary       
education1 workforce development1 or    
other purposes4  ,i ,authorization of   

,income ,share ,agreements  #aja4       
,definitions ,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  #ajb4  
,purpose2 lawfulness of instruments2    
preemption of ,state law  7a7 ,purpose  
,the purpose of this title is to        
authorize individuals to enter into     

income share agreements for the purposes
 of obtaining funds for postsecondary   
education in exchange for agreeing to   
pay to the holder of the contract a     
specified percentage of the future      
income of the individual4  7b7          
,lawfulness of contracts2 preemption    
,any income share agreement that        
complies with the requirements of       
section #ajc shall be a valid1 binding1 
and enforceable contract notwithstanding
 any ,state law limiting or otherwise   
regulating assignments of future wages  
or other income4  #ajc4 ,terms and      
conditions of income share agreement    
contracts  7a7 ,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 ,the    
income share agreement shall specify the
 percentage of future income that the   
individual subject to the agreement will
 be obligated to pay1 except that the   

agreement shall provide for that any    
year covered by the agreement during    
which the individual has an income that 
is less than #ae1jjj 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 the data are available7 the   
individual shall not be required to pay 
for that year any portion of the income 
of the individual4  7#b7 ,definition of 
income ,an income share agreement shall 
specify the definition of income to be  
used for purposes of calculating the    
obligation of the individual under the  
contract4  7#c7 ,annual limitation on   
obligation ,the percentage of income    
required under the income share         
agreement to be paid by the individual  
subject to the agreement may not exceed 
a percentage such that1 when multiplied 
by #ae1jjj1 the product exceeds the     
aggregate amount of periodic payments of

 principal and interest that would be   
required to be paid during a #ab-month  
period under a comparable loan that     
bears interest at a fixed annual rate of
 #bj percent4  7#d7 ,aggregate          
limitation on obligation ,no eligible   
individual may enter into any income    
share agreement if the total percentage 
of the future income of the individual  
that the individual agrees to pay under 
that contract1 and any other income     
share agreements of the individual1     
exceeds #ae percent of the future       
income4  7#e7 ,time-based limitation on 
obligation  7,a7 ,limitation ,the income
 share agreement may not provide for the
 individual subject to the agreement to 
assume a commitment to pay future income
 having a commitment factor1 that when  
added to the commitment factors for any 
other income share agreements to which  
the individual is subject1 equals a sum 
that exceeds the maximum commitment     
factor4  7,b7 ,commitment factor ,as    
used in this paragraph1 the term        

commitment factor means1 with respect to
 an income share agreement1 the product 
of-- 7i7 the percentage 7expressed as a 
decimal7 of the future income required  
to be paid during the period covered by 
the income share agreement2 and  7ii7   
the remaining number of years under the 
agreement that future income is required
 to be paid at such percentage4  7,c7   
,maximum commitment factor ,as used in  
this paragraph1 the term maximum        
commitment factor means1 with respect to
 an income share agreement1 #b4be 7which
 figure is the product of #g4e percent  
and the number of years in the longest  
allowable contract under paragraph      
7#f774  7#f7 ,extension of period ,the  
income share agreement may provide that 
the period covered by the income share  
agreement may be extended by a number of
 years that is equal to the number of   
years during which the agreement is in  
force for which the annual income of the
 individual is below the dollar amount  
specified in paragraph 7#a74  7#g7      

,early termination ,the income share    
agreement shall specify the terms and   
conditions by which the individual      
subject to the agreement may extinguish 
the obligations of the individual under 
the agreement before the end of the     
payment period specified in the         
agreement and any application extension 
provided for in the agreement pursuant  
to paragraph 7#f74  7b7 ,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 the         
agreement1 a disclosure document that   
clearly and simply discloses--  7#a7    
that-- 7,a7 the agreement is not a debt 
instrument1 and that the amount the     
individual will be required to pay under
 the agreement--  7i7 may be more or    
less than the amount provided to the    
individual2 and  7ii7 will vary in      
proportion to the future income of the  
individual2  7,b7 that the obligations  

of the individual under the agreement   
are not dischargeable under bankruptcy  
law1 except in a case that would impose 
an undue hardship on the debtor and the 
dependents of the debtor2  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  
obligations of the individual 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    
under the agreement and the minimum     
amount of annual income that1 pursuant  
to subsection 7a77#a71 triggers the     
obligation of the individual under the  
agreement to make payments for such     
year2 and  7,f7 the definition of income
 to be used for purposes of calculating 
the obligation of the individual2 and   
7#b7 a comparison of-- 7,a7 the amounts 
an individual would be required to pay  

under the income share agreement at a   
range of annual income levels1 which    
income levels shall correspond to the   
levels the individual might reasonably  
be expected to make given the intended  
use of the funds provided under the     
agreement1 as determined in accordance  
with guidance issued by the ,secretary  
of the ,treasury2 and  7,b7 the amounts 
required to be paid under a comparable  
loan that bears interest at a fixed     
annual rate of #aj percent4  7c7        
,non-,interference ,an income share     
agreement-- 7#a7 represents an          
obligation by the individual to pay the 
specific percentage of future income2   
and  7#b7 shall not be construed to give
 the contract holder any rights over the
 actions of an individual4  #ajd4       
,preemption of ,state ,law with respect 
to usury ,income share agreements shall 
not be subject to ,state usury laws4    
#aje4 ,rulemaking2 model disclosure     
forms  7a7 ,in general ,the ,secretary  
of the ,treasury1 in consultation with  

such other agency heads as the          
,secretary considers appropriate1 may   
issue such regulations as may be        
necessary to carry out this title4  7b7 
,model disclosure forms  7#a7 ,in       
general ,not later than #ahj days after 
the date of enactment of this ,act1 the 
,secretary of the ,treasury1 after      
consultation with such other agency     
heads as the ,secretary considers       
appropriate1 shall promulgate a model   
disclosure form for the disclosures     
required under section #ajc7;b74  7#b7  
,safe harbor ,any person who uses the   
model disclosure form promulgated       
pursuant to paragraph 7#a7 and includes 
accurate information required to be     
disclosed under section #ajc7;c7 shall  
be deemed to have satisfied the         
requirements of section #ajc7;b74  ,,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 that complies 
with the requirements of section #ajc to
 or on behalf of the individual who     
commits to pay a specified percentage of
 the future income of the individual to 
another person under such agreement1 and
 any difference in value of the payments
 to or on behalf of such individual and 
the total amount paid by such           
individual1 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 the agreement1 as a    
repayment of investment in the contract 
which reduces the basis of the holder in
 the agreement2 and  7#b7 second1 as    

income on the contract which is         
includible in gross income4  ,,iii      
,qualified education loan  #cja4        
,qualified education loan  7a7 ,in      
general ,section #bba7;d77#a7 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 #b of the ,investing in ,student
 ,success ,act of #bjag71 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     
,section #fjej,s7e7 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 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 #aife   
7#bj ,u4,s4,c4 #ajja et seq474  ,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    
income share agreements 7as defined in  
section #b of the ,investing in ,student
 ,success ,act of #bjag71 after         
industrial banking12 and  7#b7 in       
paragraph 7#e71 by inserting 1 including
 income share agreements 7as defined in 
section #b of the ,investing in ,student
 ,success ,act of #bjag7 after services 
each place that term appears4