California DFPI enters groundbreaking consent order with New York-based revenue-sharing agreements service

0

SACRAMENTO, Calif. – The California Department of Financial Protection and Innovation (DFPI) today announced that he had signed a historic agreement with New York-based Meratas, Inc., a company that the partners with educative establishments for to offer students
Income Sharing agreements or ISA to
finance post-secondary education and training.

The agreement reflects the Ministry’s decision to treat these private financing products as student loans for the purposes of the California Student Loan Servicing Act (SLSA). The move is a important first not towards to supply bigger monitoring
of AIS industry.

“Today’s action shows that we are taking important steps to better protect California student borrowers,” said DFPI Senior Deputy Commissioner Suzanne Martindale, whose consumer financial protection The division oversees student loan servicing law. “Regulate revenue sharing agreements like students ready levels
the playing ground and creates a fair market this protected all consumers.

The agreement between DFPI and Meratas is considered the first of its kind to submit an ISA repairer for state licensing and regulation. Regulating an ISA service agent under the SLSA better protects California students by ensuring that the company undergoes regular reviews and communicates honestly and fairly
with borrowers, among
many others protections.

ISAs are increasingly being used by private, for-profit companies offering post-secondary education and non-profit training programs. Under an ISA, a student agrees to repay a school a fixed percentage of future gross income of the student after graduation, but only if the student is employed and earns more a Okay amount.

Meratas voluntarily applied for a license in April this year, which led to the deal. the OK provides this the department will publish the business a conditional Licence
under SLSA.

For years, some ISA issuers have argued that state and federal lending laws do not apply to ISAs, and students WHO fund education under ISA standards did do not enjoy
the same regulations protections like other borrowers. The DFPI plans to clarify requirements for vendors and ISA service providers through future establishment of rules.

In addition to regulating student loan servicers, the DFPI licenses and regulates financial products and services, including state-chartered banks and credit unions, commodities and investment advisers, fund issuers, the offering and sale of securities and franchises, brokers, non-banking installment lenders, payday lenders, mortgage lenders and managers, escrow companies, property Assessed Clean Energy (PACE) administrators, debt collectors, lease-to-own contractors, credit repair
and consumer credit rating agencies, debt relief businesses, and Continued.

Share.

Comments are closed.