Inequitable Student Aid: A Case Study of Disparate Lending Practices and Educational Redlining Tactics in the Market for Income Share Agreements

Abstract

This report is the result of an investigation that reveals potentially harmful business practices and possible fair lending risks by Stride Funding, an education finance firm that originates and markets Income Share Agreements (ISAs). Extensive mystery shopping revealed that Stride’s lending model may violate federal fair lending law by penalizing borrowers of color for attending minority-serving institutions (MSIs) such as Historically Black Colleges and Universities (HBCUs).

Stride Funding’s own data reveal that the company’s ISA products are priced in ways that could generate huge cost disparities for students of color attending MSIs, sometimes even when an MSI is a higher-ranked school than a given non-MSI.