Outcomes-Based Financing (OBF) for Students Act

This bill establishes a consumer protection framework for Outcomes-Based Financing (OBF) products, which are financial tools where repayment is based on a student's future income. It modifies tax treatment, disclosure requirements, consumer protections, and other laws to support and regulate these products.

Title I, Tax Treatment of OBF Products: This title amends the Internal Revenue Code to exclude from gross income any discharge of indebtedness from an OBF loan or payment agreement. It also treats certain payments under OBF agreements as interest on education loans for deduction purposes, allows employer-provided OBF payments to be treated as educational assistance, and excludes from gross income amounts received by an OBF provider up to the amount of financing provided.

Title II, Disclosures Applicable to OBF Products: This title requires the Consumer Financial Protection Bureau to issue regulations and model disclosure forms for OBF products within 270 days. It mandates that key terms like 'payment calculation method', 'income threshold', and 'completion mechanisms' be disclosed more conspicuously. It also specifies detailed disclosure requirements for applications, solicitations, and approvals, and sets rules for advertising OBF products.

Title III, Consumer Protections for OBF Products: This title defines key OBF terms such as 'income threshold', 'OBF duration', and 'OBF product'. It requires that OBF products have a maximum duration after which the obligation ends, and that payments are only due when income exceeds a threshold. It also amends bankruptcy law to exclude OBF products from the list of non-dischargeable debts.

Title IV, Other Clarifications to Support OBF Products: This title directs the Treasury to allow continuing consent for tax return information disclosure to OBF providers. It amends the Higher Education Act to include OBF products in preferred lender arrangement disclosures and to allow proprietary institutions to exclude OBF payments from certain calculations. It also amends the Equal Credit Opportunity Act to permit using empirically derived credit systems based on graduation rates and income data for OBF underwriting, and amends the Fair Credit Reporting Act to allow reporting of OBF contract terms but prohibit speculation about future amounts owed.