,i  #aafth ,,congress  #ast ,session    
,h4 ,r4 #ahaj  ,,in ,,the ,,house ,,of  
,,representatives  ,march #ah1 #bjai    
,mr4 ,green of ,tennessee 7for himself  
and ,mr4 ,gonzalez of ,texas7 introduced
 the following bill2 which was referred 
to the ,committee on ,financial         
,services1 and in addition to the       
,committees on ,ways and ,means1        
,education and ,labor1 ,armed ,services1
 and ,veterans' ,affairs1 for a period  
to be subsequently determined by the    
,speaker1 in each case for consideration
 of such provisions as fall within the  
jurisdiction of the committee concerned 
,a ,,bill  ,to provide the legal        
framework and income tax treatment      
necessary for the growth of innovative  
private financing options1 and for other
 purposes4  #a4 ,short title2 table of  
contents  7a7 ,short title ,this ,act   
may be cited as the ,kids to ,college   
,act4  7b7 ,table of contents ,the table
 of contents for this ,act is as        
follows3  ,sec4 #a4 ,short title2 table 

of contents4 ,sec4 #b4 ,definitions4    
,title ,i--,tax ,treatment of           
,income-,share ,agreements ,sec4 #aja4  
,tax treatment of proceeds and payments 
of future income4 ,sec4 #ajb4 ,terms and
 conditions of income-share agreement   
contracts4 ,sec4 #ajc4 ,rulemaking2     
model disclosure forms4 ,sec4 #ajd4     
,truth in ,lending ,act4 ,sec4 #aje4    
,consent to continuing release of       
taxpayer information under income share 
agreement4 ,title ,,ii--,treatment of   
,income-,share ,agreements ,under ,state
 ,law ,sec4 #bja4 ,lawfulness of        
contracts2 preemption of ,state law4    
,sec4 #bjb4 ,preemption of ,state law   
with respect to usury4 ,sec4 #bjc4      
,preemption of pre-existing ,state laws 
with respect to ability-to-repay and    
licensing laws4 ,title ,,iii--,qualified
 ,education ,loan ,sec4 #cja4 ,qualified
 education loan4 ,title ,,iv--,federal  
,individual ,assistance ,treatment of   
,income-,share ,agreements ,sec4 #dja4  
,proceeds not treated as income in      

calculation of financial need under the 
,higher ,education ,act of #aife4 ,title
 ,v--,treatment ,under ,securities ,laws
 ,sec4 #eja4 ,income-share agreements   
not treated as securities4 ,sec4 #ejb4  
,businesses making income-share         
agreements excluded from investment     
company treatment4 ,title               
,,vi--,treatment under ,federal consumer
 finance laws ,sec4 #fja4 ,income-share 
agreement anti-discrimination           
protections4 ,sec4 #fjb4 ,prohibition on
 requiring preauthorized electronic fund
 transfers4 ,sec4 #fjc4 ,treatment under
 the ,fair ,credit ,reporting ,act4     
,sec4 #fjd4 ,application of the         
,military ,lending ,act4 ,sec4 #fje4    
,application of the ,servicemembers     
,civil ,relief ,act4 ,sec4 #fjf4        
,rulemaking4 ,title ,,vii--,treatment   
under other laws ,sec4 #gja4 ,insurance 
and wagering4 ,sec4 #gjb4 ,payments not 
considered prepayments4  #b4            
,definitions ,for purposes of this ,act3
 7#a7 ,comparable loan ,the term        

comparable loan means1 with respect to  
an income-share agreement1 a loan that--
  7,a7 has an original principal amount 
such that1 after any origination fees on
 the loan are paid1 the amount of loan  
financing received by the individual is 
equal to the total amount of funding    
provided under the income-share         
agreement to or on behalf of the        
individual subject to the agreement2    
7,b7 has the same term to maturity as   
the duration of the income-share        
agreement2 and  7,c7 is fully amortized 
over such term with monthly payments of 
principal and interest4  7#b7           
,income-share agreement ,the term       
income-share agreement means an         
agreement--  7,a7 between an individual 
and an ,,isa funder2  7,b7 which meets  
the requirements of section #ajb2 and   
7,c7 under which-- 7i7 the ,,isa funder 
pays amounts to1 or on behalf of1 such  
individual for costs associated with a  
postsecondary training program1 or any  
other program designed to increase the  

individual's human capital1             
employability1 or earning potential 7and
 not limited to programs eligible to    
participate in programs under title ,,iv
 of the ,higher ,education ,act of      
#aife71 as well as any personal expenses
 7such as books1 supplies1              
transportation1 and living costs7       
incurred by the individual while        
enrolled in such a program1 or for the  
refinancing of debt used for these      
purposes 7hereinafter in this ,act      
referred to as income-share funding72   
and  7ii7 such individual pays to such  
,,isa funder 7or the ,,isa funder's     
successor in interest7 amounts equal to 
a specified percentage of the           
individual's future income1 for a       
defined term 7hereinafter in this ,act  
referred to as income-share payments74  
7#c7 ,,isa funder ,with respect to an   
income-share agreement1 the term ,,isa  
funder means the party to such agreement
 who--  7,a7 pays amounts to1 or on     
behalf of1 an individual solely for the 

purposes specified in paragraph         
7#b77;,c77i72 and  7,b7 has the right to
 receive a specified percentage of the  
individual's future income4  7#d7       
,qualified ,,isa ,the term ,qualified   
,,isa means an income-share agreement   
that complies with the following3 7,a7  
,affordability for low after-school     
income ,the income-share agreement      
provides that when an individual subject
 to the agreement has an income that is 
equal to or below the amount that is    
#aej percent of the poverty line for a  
single person 7as defined in section    
#fgc of the ,community ,services ,block 
,grant ,act 7#db ,u4,s4,c4 #iijb771 the 
percentage of income obligation for the 
individual is zero4 ,the preceding      
sentence may not be interpreted to      
preclude the charging of fees or nominal
 payments 7as described under section   
#ajb7;a77#e77 during this period4  7,b7 
,limit on percentage of income ,the     
maximum percentage of income an         
individual would be required to pay     

under the agreement does not exceed #bj 
percent1 and the product of such        
percentage and the number of years of   
the agreement does not exceed #b4be     
7which figure is the product of #g4e    
percent and the number of years in the  
longest allowable contract under section
 #ajb7;a77#c774  7,c7 ,appropriate risk 
sharing ,the payments required under    
such agreement for an individual with   
income during the payment term equal to 
#age percent of the poverty line for a  
single person 7as defined in section    
#fgc of the ,community ,services ,block 
,grant ,act 7#db ,u4,s4,c4 #iijb77 would
 not exceed the payments on a comparable
 loan that bears interest at a rate     
equal to the annual percentage rate of  
interest limitation under section       
#ihg7;b7 of title #aj1 ,united ,states  
,code4  7#e7 ,state ,the term ,state    
means 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#f7 ,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  ,i ,tax          
,treatment of ,income-,share ,agreements
  #aja4 ,tax treatment of proceeds and  
payments of future income ,for purposes 
of the ,internal ,revenue ,code of      
#aihf-- 7#a7 ,funding excluded from     
gross income ,in the case of an         
individual1 gross income shall not      
include the amount of any income-share  
funding which is paid to or on behalf of
 such individual under an income-share  

agreement4  7#b7 ,difference in         
repayment not included as gross income  
,in the case of an income-share         
agreement under which the income-share  
funding exceeds the total income-share  
payments 7in any period over the life of
 the contract71 the individual's gross  
income shall not include the amount of  
such excess4  7#c7 ,treatment of        
payments of future income ,the amount of
 any income-share payments under an     
income-share agreement shall be         
treated--  7,a7 first1 with respect to  
so much of such amount as does not      
exceed the income-share funding under   
such agreement1 as a recovery of        
investment 7with a corresponding        
reduction in basis7 in the contract2 and
  7,b7 second1 as income on the contract
 which is includible in gross income4   
#ajb4 ,terms and conditions of          
income-share agreement contracts  7a7   
,terms and conditions ,an income-share  
agreement shall not be treated as       
meeting the requirements of this section

 unless3 7#a7 ,specified percentage of  
income ,the agreement specifies the     
percentage of future income required to 
be paid4  7#b7 ,definition of income    
,the income-share agreement specifies   
the definition of income to be used for 
purposes of calculating an individual's 
obligation to pay under the agreement1  
which shall not in any case include the 
income of the individual's children4    
7#c7 ,specified duration2 extension of  
period  7,a7 ,duration ,the agreement   
specifies the maximum period of time    
during which the individual will be     
obligated to pay a percentage of the    
individual's future income 7excluding   
periods when just a nominal payment 7as 
described under paragraph 7#e77 is      
required71 which may not 7except as     
provided in subparagraph 7,b77 exceed   
#cfj months4  7,b7 ,extension of period 
,the agreement may provide for the      
extension of such period by a number of 
months during which the individual's    
percentage of income obligation         

7excluding nominal payments and fees7   
was zero1 either because of further     
enrollment in education or training or  
the individual's income was below the   
level at which payments are required in 
the agreement4  7#d7 ,early termination 
,the agreement specifies the terms and  
conditions under which the individual   
subject to the agreement may terminate  
the agreement4  7#e7 ,nominal payments  
,the agreement specifies any nominal    
monthly payment that is required during 
periods when the individual subject to  
the agreement has no percentage of      
income obligation1 except that such     
nominal monthly payment shall not exceed
 twenty-five dollars per month 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           
available74  7b7 ,required disclosures  
,an income-share agreement does not     

comply with the requirements of this    
section unless the individual who is    
committing under the agreement to pay   
future income is provided1 before       
entering into such agreement1 a written 
document that clearly and simply        
discloses--  7#a7 that 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 individual pursuant to the       
agreement2 and  7,b7 will vary in       
proportion to the individual's future   
income2  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    
debtor's dependents2  7#c7 whether the  
obligations of the individual under the 
agreement may be extinguished through   
prepayment and1 if so1 under what terms2
  7#d7 the duration of the individual's 
obligations under the agreement 7absent 

such prepayments71 including any        
circumstances under which the duration  
of the agreement would be extended or   
discharged2  7#e7 the percentage of     
income the individual is committing to  
pay under the agreement1 including      
whether the percentage of income is     
fixed or variable under the agreement1  
and the minimum amount of annual income 
that triggers the individual's          
obligation under the agreement to make  
payments for such year2  7#f7 the       
definition of income to be used for     
purposes of calculating the individual's
 obligation under the agreement2  7#g7 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 ,director of

 the ,bureau of ,consumer ,financial    
,protection2 to  7,b7 the amounts       
required to be paid under one or more   
comparable loans1 including a loan at an
 interest rate determined by the        
,director of the ,bureau of ,consumer   
,financial ,protection to be an         
approximation of the interest rate      
available to student loan borrowers in  
the private marketplace and1 where      
applicable1 a ,federal ,stafford loan2  
7#h7 income verification documentation1 
including personal tax records submitted
 to the ,internal ,revenue ,service1    
that the individual may be required to  
provide under the agreement2  7#i7      
intent to conduct annual reconciliation 
relating to obligations owed by the     
individual under the agreement2 and     
7#aj7 any nominal payments required     
under the agreement4  7c7               
,non-,interference ,an income-share     
agreement represents an obligation by   
the individual pay the specific         
percentage of future income1 but shall  

not be construed to give the contract   
holder any rights over an individual's  
actions4  7d7 ,effect of failure ,to    
provide documentation  7#a7 ,in general 
,absent income documentation from an    
individual under an income-share        
agreement1 the ,,isa funder of such     
agreement 7or the funder's successor in 
interest7 may assume a certain income   
level for the individual1 up to the     
level that would create an obligation   
equal to the maximum payment amount     
under the agreement4  7#b7 ,treatment   
under ,state law ,any obligation        
resulting from an assumed income level  
under paragraph 7#a7 shall not be       
considered to be imposing an unlawful   
fee under a ,state law unless such      
,state law was issued after the date of 
the enactment of this ,act and such     
,state law expressly states that it is  
intended to apply to income-share       
agreements4  7#c7 ,verification of      
income ,if an individual supplies an    
,,isa funder 7or its successor in       

interest7 with their income verification
 information within #ahj days of the    
,,isa funder 7or its successor in       
interest7 assuming an income level for  
such individual under paragraph 7#a71   
the individual shall be entitled to have
 any payments that were made in excess  
of their actual obligation under the    
contract either refunded to them or     
credited to future obligations under the
 contract4  #ajc4 ,rulemaking2 model    
disclosure forms  7a7 ,no ,bureau       
general rulemaking authority ,except as 
provided under subsection 7b7 and       
section #ajb7;b77#g71 the ,director of  
the ,bureau of ,consumer ,financial     
,protection may not issue regulations   
under this title4  7b7 ,model disclosure
 forms  7#a7 ,in general ,not later than
 #ahj days after the date of the        
enactment of this ,act1 the ,director of
 the ,bureau of ,consumer ,financial    
,protection1 after engaging in          
appropriate consumer testing of such    
forms1 shall promulgate a model         

disclosure form for the disclosures     
required under section #ajb7;b74  7#b7  
,safe harbor ,any person who uses the   
model disclosure form promulgated       
pursuant to paragraph 7#a7 and includes 
accurate information required under     
section #ajb7;b7 shall be deemed to be  
in compliance with the disclosure       
requirements under section #ajb7;b74    
#ajd4 ,truth in ,lending ,act ,any      
income-share agreement that complies    
with the disclosure requirements of     
section #ajb7;b7 shall be deemed to be  
in compliance with the ,truth in        
,lending ,act4  #aje4 ,consent to       
continuing release of taxpayer          
information under income share agreement
 ,the ,secretary of the ,treasury shall 
modify ,treasury ,regulations and       
guidance to provide for continuing      
consent to disclosure of an individual's
 return information to an ,,isa funder  
7or the funder's successor in interest7 
under an income-share agreement1 but    
only for periods relevant to1 and only  

to the extent the ,secretary determines 
is necessary and appropriate in carrying
 out the terms of1 such agreement4  ,,ii
 ,treatment of ,income-,share           
,agreements ,under ,state ,law  #bja4   
,lawfulness of contracts2 preemption of 
,state law ,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  #bjb4 ,preemption of  
,state law with respect to usury ,a     
,qualified ,,isa shall not be subject to
 ,state law with respect to usury1      
unless such ,state law was issued after 
the date of the enactment of this ,act  
and such ,state law expressly states    
that it is intended to apply to         
income-share agreements4  #bjc4         
,preemption of pre-existing ,state laws 
with respect to ability-to-repay and    
licensing laws ,a ,qualified ,,isa shall
 not be subject to a ,state law with    

respect to ability-to-repay             
requirements1 and an ,,isa funder       
issuing a ,qualified ,,isa shall not be 
subject to any ,state law with respect  
to licensing or registration1 unless    
such ,state law was issued after the    
date of the enactment of this ,act and  
such ,state law expressly states that it
 is intended to apply to income-share   
agreements4  ,,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 such term is defined in section #b 
of the ,help ,our ,graduates ,act7 that 
complies with the requirements of       
section #ajb of such ,act1 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 7a744  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 ,proceeds 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 that complies    
with the requirements of section #ajb of
 this ,act 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 ,treatment
 ,under ,securities ,laws  #eja4        
,income-share agreements not treated as 
securities ,an income-share agreement   
shall not be treated as a security for  
purposes of the securities laws 7as     
defined in section #c7;a7 of the        

,securities ,exchange ,act of #aicd 7#ae
 ,u4,s4,c4 #gh;c7a7771 any similar      
,state law1 or any ,state law that      
directly or indirectly prohibits1       
limits1 or imposes conditions1 based on 
the merits of an offering or issuer of  
securities1 upon the offer or sale of   
any security4 ,nothing in the preceding 
sentence shall be construed to prevent  
an instrument that is collateralized by1
 or serviced by the cash flows of1 an   
income-share agreement from being       
treated as a security for purposes of   
any law described in such sentence4     
#ejb4 ,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 in 
section #b of the ,help ,our ,graduates 
,act712 and  7#b7 in paragraph 7#e7--   
7,a7 by inserting 1 including purchasing

 or otherwise acquiring income-share    
agreements 7as defined in section #b of 
the ,help ,our ,graduates ,act7 after   
services the first place it appears2 and
  7,b7 by inserting 1 including making  
income-share agreements 7as so defined7 
after services the second place it      
appears4  ,,vi ,treatment ,under        
,federal ,consumer ,finance ,laws  #fja4
 ,income-share agreement                
anti-discrimination protections ,section
 #gjb of the ,equal ,credit ,opportunity
 ,act 7#ae ,u4,s4,c4 #afia;a7 is        
amended--  7#a7 in subsection 7d71 by   
inserting before the period the         
following3 1 or the right granted under 
an income-share agreement 7as defined in
 section #b of the ,help ,our ,graduates
 ,act72 and  7#b7 in subsection 7e7--   
7,a7 by striking or any assignee and    
inserting any assignee2 and  7,b7 by    
inserting before the period the         
following3 2 or any person who regularly
 extends1 renews1 or continues funding  
under an income-share agreement 7as     

defined in section #b of the ,help ,our 
,graduates ,act74  #fjb4 ,prohibition on
 requiring preauthorized electronic fund
 transfers ,section #iac7a7 of the      
,electronic ,fund ,transfer ,act 7#ae   
,u4,s4,c4 #afick7#a77 is amended by     
inserting after a consumer the          
following3 or the entering into of an   
income-share agreement 7as defined in   
section #b of the ,help ,our ,graduates 
,act7 with a consumer4  #fjc4 ,treatment
 under the ,fair ,credit ,reporting ,act
 ,section #fje of the ,fair ,credit     
,reporting ,act 7#ae ,u4,s4,c4 #afha;c7 
is amended by adding at the end the     
following3  7i7 ,income-,share agreement
 information ,with respect to an        
income-share agreement 7as defined in   
section #b of the ,help ,our ,graduates 
,act71 a consumer report made by a      
consumer reporting agency-- 7#a7 may    
include a description of the contract   
terms of the income-share agreement and1
 subject to subsection 7a71 information 
with respect to amounts that are owed   

under such agreement2 and  7#b7 may not 
include any speculation about future    
amounts that may be owed under the      
income-share agreement4  4  #fjd4       
,application of the ,military ,lending  
,act ,section #ihg of title #aj1 ,united
 ,states ,code1 is amended--  7#a7 by   
redesignating subsection 7i7 as         
subsection 7j72 and  7#b7 by inserting  
after subsection 7h7 the following3  7i7
 ,treatment of income-,share agreements 
,the ,secretary of ,defense shall issue 
regulations to apply this section to    
income-share agreements 7as defined in  
section #b of the ,help ,our ,graduates 
,act71 and an income-share agreement    
shall be deemed to meet the annual      
percentage rate of interest limitation  
under subsection 7b7 if such agreement  
would meet the requirements of section  
#b7d77;,c7 of the ,kids to ,college ,act
 7related to appropriate risk sharing7  
but with reference to the rate specified
 in subsection 7b74  4  #fje4           
,application of the ,servicemembers     

,civil ,relief ,act ,section #bjg of the
 ,servicemembers ,civil ,relief ,act    
7#ej ,u4,s4,c4 #cicg7 is amended by     
adding at the end the following3  7f7   
,treatment of income-,share agreements  
,the ,secretary of ,defense shall issue 
regulations to apply this section to    
income-share agreements 7as defined in  
section #b of the ,help ,our ,graduates 
,act71 specifically by stating that an  
income-share agreement shall be         
considered to have met the requirements 
of this section if the agreement would  
meet the requirements of section        
#b7d77;,c7 of the ,kids to ,college ,act
 7relating to appropriate risk sharing7 
but with reference to the rate specified
 in subsection 7a77#a74  4  #fjf4       
,rulemaking ,not later than #ahj days   
after the date of enactment of this     
,act--  7#a7 the ,director of the       
,bureau of ,consumer ,financial         
,protection shall issue regulations to  
carry out the amendments made by section
 #fja and #fjb2 and  7#b7 the ,secretary

 of ,defense shall issue regulations to 
carry out the amendment made by section 
#fjd and #fje4  ,,vii ,treatment ,under 
,other ,laws  #gja4 ,insurance and      
wagering ,income-share agreements shall 
not be treated as a contract for        
insurance or a betting or wagering      
contract under any ,federal or ,state   
law4  #gjb4 ,payments not considered    
prepayments ,with respect to an         
income-share agreement1 any requirement 
that an individual pay an amount greater
 than the income-share funding in order 
to extinguish the income-share agreement
 obligation earlier than the end of the 
term shall not be considered a          
prepayment penalty for purposes of any  
,federal or ,state law with respect to  
prepayment penalties4