May 16, 2018Nelson Mullins’ Keith Poston to Participate in Bankruptcy Group ‘NextGen’ Program
February 9, 2017
Reprinted with permission from the American Enterprise Institute
New private financing options for higher education are becoming more popular every year. Products that take into account nontraditional lending factors, such as Alternative Finance (AltFinance), or that attempt to predict a student's future income with income-share agreements (ISAs), provide an additional layer of transparency to students and their families with value for money calculations. However, with AltFinance, which prices loans based on a student's perceived likelihood of repayment, and ISAs, in which an investor obtains repayment based on a student's future income, the risk of Equal Credit Opportunity Act (ECOA) claims is significant. Based on prior research, some of the best graduation rates and future income predictors may disproportionately affect—or have a disparate impact on—protected classes of people. As AltFinance lenders and ISA investors consider these issues, maintaining accurate data to support the business necessity and manifest relationship defense to an ECOA claim is important.
These materials have been prepared for informational purposes only and are not legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Internet subscribers and online readers should not act upon this information without seeking professional counsel.