Outcomes-Based Financing (OBF) for Students Act
- Bill Number
- H.R. 9469
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2026-06-25: Referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, Education and Workforce, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- Last Updated
- 2026-07-10T14:59:07Z
AI-Generated Summary
Purpose of the Legislation This bill establishes a federal consumer protection framework to facilitate the development and use of outcomes-based financing (OBF) products. These products finance postsecondary education, workforce training, and related expenses, with repayment obligations tied to the recipient's future income rather than fixed loan terms.
Key Provisions
- Title I (Tax Treatment): Excludes certain OBF-related discharges or alterations from gross income under IRC Section 108; treats excess payments under OBF agreements as deductible interest on education loans under IRC Section 221; classifies OBF obligations as educational assistance under IRC Section 127; and excludes principal repayments received by OBF providers from their gross income under new IRC Section 113.
- Title II (Disclosures): Amends the Truth in Lending Act (TILA) to require specific, conspicuous disclosures at application, approval, and consummation stages, including payment calculation methods, income thresholds, maximum payments, duration, APR ranges via comparison tables, and completion mechanisms. Directs the Consumer Financial Protection Bureau (CFPB) to issue model forms and regulations within 270 days. Regulates advertising of key terms.
- Title III (Consumer Protections): Defines OBF products, outcomes-based loans, and outcomes-based payment agreements in TILA Section 140(h). Imposes limits such as maximum 20% of income for payments, income thresholds at least 250% of the federal poverty line, duration caps (240 payments/360 months), and risk-sharing caps tied to poverty guidelines and Treasury yields. Prohibits wage assignments, acceleration (except after 180 days for loans), and interference with personal actions. Provides discharges for total disability or death. Limits includable income for calculations and allows income estimation with safeguards. Preempts certain state laws on usury, ability-to-repay, equal payments, and term limits, while permitting states to enact referenced alternatives.
- Title IV (Other Clarifications): Authorizes ongoing IRS consent for tax information sharing with OBF providers. Amends the Higher Education Act for OBF reporting in preferred lender arrangements and model disclosures. Updates the Equal Credit Opportunity Act to permit empirically sound, outcomes-based underwriting using graduation and earnings data. Modifies the Fair Credit Reporting Act to allow contract term reporting but prohibits speculation on future obligations.
Significant Changes to Existing Law
- Creates new tax exclusions and treatments specific to OBF products under the Internal Revenue Code.
- Expands TILA with detailed OBF disclosure rules, consumer protections, and preemption provisions that override conflicting state requirements on financing terms.
- Amends 11 U.S.C. § 523(a)(8) to treat OBF products as dischargeable in bankruptcy, unlike most federal student loans.
- Updates the Higher Education Act, Equal Credit Opportunity Act, and Fair Credit Reporting Act to integrate OBF products into existing regulatory frameworks.
Potential Impacts
- Government Agencies: Requires CFPB rulemaking on disclosures and reporting; directs Treasury modifications for tax consents; and imposes new compliance and reporting duties on the Department of Education.
- Citizens: Offers tax benefits, bankruptcy discharge options, and income-based safeguards for OBF users while mandating clear disclosures and affordability protections.
- No direct effects on international relations are addressed.
Main Stakeholders Affected
- OBF recipients (students and trainees).
- OBF providers (financiers and merchants).
- Postsecondary institutions and proprietary schools.
- Federal agencies (CFPB, IRS, Department of Education).
- States (subject to federal preemption with limited carve-outs).
Notable Legal, Constitutional, or Political Implications
- Invokes federal preemption of state laws under the Supremacy Clause for matters like usury and ability-to-repay rules, while preserving state authority for explicitly referenced OBF legislation.
- Introduces bankruptcy treatment changes that distinguish OBF from traditional student debt under the Bankruptcy Code.
- Bipartisan introduction supports alternative education financing mechanisms with built-in consumer safeguards.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Rep. Torres, Ritchie [D-NY-15]
Recent Actions
- 2026-06-25: Referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, Education and Workforce, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2026-06-25: Referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, Education and Workforce, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2026-06-25: Referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, Education and Workforce, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2026-06-25: Referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, Education and Workforce, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2026-06-25: Introduced in House
- 2026-06-25: Introduced in House
Bill Versions
- Outcomes-Based Financing (OBF) for Students Act — issued 2026-06-25 — PDF (62 pages)