Better Future Forward finalizes compliance plan with the Consumer Financial Protection Bureau (CFPB) that has resulted in an updated disclosure format for its ISA
BFF will deploy new disclosures it developed with consistent feedback from the CFPB
For Immediate Release
September 7, 2022
Alexandria, VA, USA
Contact Name:
Kevin James
Phone: 703-587-4080
kevin.james@betterfutureforward.org www.betterfutureforward.org
Better Future Forward (BFF), a 501(c)(3) nonprofit income share agreement (ISA) provider, is pleased to announce it has finalized its compliance plan with the Consumer Financial Protection Bureau (CFPB) that has resulted in an updated disclosure format for its ISA.
In September 2021, BFF entered into a consent order with the Bureau centered around the content of its student-facing disclosures and how it described its ISA program. In the consent order, the Bureau noted BFF's “demonstrated good faith and substantial cooperation” and imposed no civil monetary penalties.
To implement the consent order, BFF developed a format for disclosure of its ISAs with consistent input from the Bureau. The Bureau has now indicated its non-objection to the new disclosure format. BFF is excited to deploy the new format in its work supporting students.
"BFF recognizes the difficulty in fitting an ISA into existing private educational loan disclosures, and we appreciate the Bureau's helpful feedback while we developed a disclosure format for ISAs that addresses their unique structure while remaining true to the disclosure goals of the Truth in Lending Act and Regulation Z," BFF founder and CEO Kevin James said. “Our Board and Leadership Team are deeply grateful to the Bureau for working so closely with the organization through this comprehensive process.”
BFF is committed to sharing the new disclosure format publicly. This commitment is part of BFF’s broader work focused on building an equitable student finance system which is accessible, affordable, and accountable for the success of all students in their postsecondary pursuits. This framework and vision were the cornerstone of a white paper released by BFF this past summer.
"We believe that a good working relationship between regulators and ISA providers is the most effective interim solution absent clear federal and state legislation tailored to ISA programs,” James added. “In that vein, BFF also fully supports efforts by a bipartisan group of legislators in the U.S. Senate to update consumer protection law to address ISAs, including adding new consumer guardrails and clear consumer disclosures for ISAs."
BFF is a 501(c)(3) nonprofit social enterprise which provides ISAs through sustainable community-based funds. These funds are designed to support historically marginalized students along their postsecondary pathways of choice. The organization believes all students deserve the chance to succeed without mortgaging their future financial well-being or worrying about how to pay for school or afford future monthly payments.
Since fall 2017, BFF has provided more than 200 students with $2M+ in sustainable education financing to complete their postsecondary educations. To date, 85 percent of BFF students have persisted in or graduated from their four-year college degree program of choice.
To increase access to higher education for underserved students, BFF carefully structures its ISA model to include important protections for students: In accepting BFF’s ISA, students agree to make 120 income-determined payments (10 years’ worth) back to the fund, and only in months when they earn above $42,500 (adjusted each year for inflation). A student’s payment—if any is due—is set at a fixed percentage of their income to keep their monthly payment amounts manageable. A student’s payment obligation is complete either after making 120 income-determined payments, after 20 years elapse, or when they reach an early completion amount—whichever circumstance occurs first.
In addition, BFF’s ISAs are designed so that the most a student can pay is a 7.5% effective APR. Students can also complete their ISA early at any point by paying this amount.