Sponsors (2)
Official title: 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.
Introduced June 25, 2026 by Erin Houchin · Last progress June 25, 2026
The bill standardizes and incentivizes outcomes‑based education financing with stronger federal consumer protections and disclosure rules to expand access and transparency, but it reduces tax revenue, raises privacy and preemption concerns, increases compliance costs, and may shift risks or create new harms for some students and providers.
Students and borrowers gain clear consumer protections (caps on payments at 20% of income, limits on duration, APR protections for lower‑income borrowers, and revocable payroll deductions), reducing the risk of unaffordable or involuntary collections.
All prospective OBF customers get standardized, prominent disclosures (APR explanations, comparison tables, key ad disclosures) and the CFPB must produce a model integrated disclosure within a set deadline, improving transparency and comparability across providers.
Individuals whose outcomes‑based obligations are discharged (and certain early receipts of OBF providers) will not have those amounts included in gross income and some OBF payments can qualify as student loan interest or employer §127 assistance, lowering tax burdens and encouraging employer/market support for OBF.
Federal taxpayers may face reduced tax revenue because discharged OBF amounts and certain provider receipts are excluded from taxable income, increasing deficits or requiring offsets.
The bill preempts many state consumer‑protection laws (usury, payment timing, ability‑to‑repay and related remedies), which may weaken protections for students in states with stronger rules and limit local enforcement options.
New privacy risks arise from required detailed disclosures and continuing consent for IRS tax‑return data sharing with private OBF providers, increasing exposure of sensitive financial information.
Based on analysis of 4 sections of legislative text.
Creates tax exclusions and education‑loan treatment for outcomes‑based financing, sets OBF‑specific disclosure, advertising, underwriting, and credit reporting rules, and directs agency rulemaking.
Creates a new federal tax and consumer‑protection framework for outcomes‑based financing (OBF) products used to pay for postsecondary training and related expenses. It excludes certain OBF debt relief and provider receipts from gross income, allows limited treatment of OBF payments like student loan interest and employer educational assistance, and requires the CFPB, Treasury, and Education Department to issue implementing rules and disclosures. Establishes detailed Truth in Lending Act disclosure and advertising requirements specific to OBF products, adds OBF definitions into TILA’s private education lending rules, permits specific credit‑model underwriting and limited credit‑reporting of OBF contract terms, and directs regulatory changes to allow tax information sharing for OBF administration. Most tax changes apply to taxable years after enactment; agencies must issue regulations within 180–270 days.