Swofford and Pelka mentioned there are two bills that would aid Paytronage and other platforms in the ISA space: the bipartisan ISA Act of 2017 and the Investing in Student Success Act.
The first bill would revise the Internal Revenue Code to consider an ISA as a qualified education loan that cannot be discharged in bankruptcy and would not be seen as income for tax and federal financial aid purposes.
“If either of these bills passes, it would set exact constraints around ISA investing that protects students as well as lenders,” said Pelka. He added that the SEC would not be able to regulate ISA companies.
Beyond educational funding, ISAs could act as a networking or recruitment platform, said Pelka.
“Because a lender makes higher returns when a student succeeds, they are incentivized to provide them with educational resources, networks and even jobs,” said Pelka. This aspect distinguishes these programs from traditional private loans, in which lenders make more on interest accumulation and repayment defaults.
Connor said their strategy is to bring between 100 and 300 students onto Paytronage.