IBR (Income-Based Repayment)
Guiding Principles

Our mission is to provide lending solutions that enable our customers to take greater control of their financial lives.

Through our partnership with Edly, we hope to remove barriers to education and the burden of unpayable debt for students while providing a fair, transparent, safe, long-term option for funding their tuition needs. In designing our program, we sought to align the interests of students, schools, and the source of the tuition funding—by tying the cost of the education to its value and incentivizing schools in new ways towards responsible behavior.

The innovative lending product that achieves this is called Income Based Repayment Loans (“IBRs”). In short – as their name implies – these loans are primarily based on students’ actual income after graduation. Students make no payments while in college, then their payment will adjust with their income. Lose your job? You won’t be burdened with payments. The total amount you owe and will pay for the life of the loan is determined by your success after graduation. IBRs therefore are inherently fair—matching students’ tuition payments with their ability to pay.

Since using Private IBRs to fund student tuition is new, there are currently many interpretations and forms being tested in the market. FinWise Bank is publishing these Guiding Principles in the hope that it will lead to minimum standards which will allow for IBRs to reach their full potential to provide affordable and accessible tuition funding for all students.

As a student lender, we commit to ensuring a positive borrower experience as follows:

• FinWise borrowers will receive required disclosures so that they can compare IBRs with other financing alternatives enabling them to make well- informed decisions.
• FinWise commits to helping borrowers understand their rights and responsibilities under the terms of the loans.
• FinWise will focus on positive student outcomes by helping to provide alignment of interests among all parties (schools, investors, and students).
• FinWise is committed to eliminating intentional or illegal discrimination and the use of abusive or predatory tactics in our marketing, sales, origination or servicing of loans.
• FinWise is committed to continuous improvement in determining suitability of a loan for students based on their likelihood of using the tuition payments to gain useful skills to ensure students are set up for post-graduation success.
• The IBR program will not use FICO or similar credit scores because they can be biased against certain groups of students and generally may not be best suited for students.
• FinWise borrowers will be provided a reasonable minimum income threshold below which they would not need to make IBR loan payments because it would be an economic hardship.
• The IBR program will establish a reasonable cap on the total amount of payments a student would make (related to the cost of tuition) so that they never pay too much regardless of success.
• FinWise will continue working with borrowers through the life cycle of the loan to ensure the loan terms are continuously implemented fairly and in accordance with appropriate oversight.
• FinWise will work in good faith to resolve any complaints from borrowers, institutions of higher learning, loan servicers and any other participant in the lending process.