To provide a consumer protection framework necessary to support the growth of outcomes-based student financing tools to support workforce training, postsecondary education, and economic development, and for other purposes.
About This Bill
Committee
Latest Action · June 25, 2026
Referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, Education and Workforce, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
The Outcomes-Based Financing for Students Act creates a new framework for education financing where borrowers make payments based on their future income rather than fixed loan amounts. The bill provides tax benefits to OBF providers by allowing them to exclude the return of principal from taxable income, while establishing comprehensive consumer protections including a cap on monthly payments at twenty percent of income, an eight percent interest rate ceiling for low-income borrowers, and mandatory disclosures at multiple stages of the lending process. The Consumer Financial Protection Bureau must issue disclosure rules within 270 days and regulations governing credit reporting, while strict advertising requirements prohibit lenders from promoting specific terms unless they actually offer those arrangements. The legislation also preempts most state consumer protection laws for OBF products, though states retain the ability to enforce their own specific regulations for income-share agreements. These protections apply to education-related financing and are designed to ensure borrowers understand the terms, don't exceed debt levels of twenty percent of expected income, and receive $0 payments when earnings fall below poverty thresholds.
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