Houchin, Torres Introduce Bipartisan Outcomes-Based Financing for Students Act

WASHINGTON, D.C. - Congresswoman Erin Houchin (R-IN-09) and Congressman Ritchie Torres (D-NY-15) recently introduced the bipartisan Outcomes-Based Financing (OBF) for Students Act. Companion legislation was introduced in the Senate by Senators Todd Young (R-IN), Mark Warner (D-VA), and Chris Coons (D-DE). This bill establishes the first comprehensive federal framework for outcomes-based financing products that help students access workforce training and postsecondary education while providing strong consumer protections.

The legislation creates clear federal standards for outcomes-based financing products, requiring disclosures, affordability protections, and transparency while supporting innovative financing models that expand access to education and workforce development opportunities.

"Too often, state higher education programs leave students in debt for degrees that have little value in the market. That's why I'm co-leading the bipartisan Outcomes-Based Financing for Students Act. It ties a portion of state higher education funding to how well schools perform on degree completion, retention, and workforce placement. This means schools will have to show that the programs they offer are worth the price of admission. By doing this, we can help more Americans get the skills they need for jobs that are in demand." - Rep. Houchin

"Every American deserves the opportunity to pursue higher education or workforce training without being forced into a one-size-fits-all financing model. The Outcomes-Based Financing for Students Act establishes a strong federal consumer protection framework that promotes transparency, accountability, and affordability while encouraging responsible innovation in education financing. By setting clear rules of the road, strengthening borrower protections, and expanding access to high-quality education and skills training, this bipartisan legislation will help more Americans invest in their future, build rewarding careers, and contribute to a stronger, more competitive economy." - Rep. Torres

The Outcomes-Based Financing for Students Act provides consumer protections by establishing clear disclosure requirements, affordability standards, payment limitations, and other safeguards for outcomes-based financing products while creating regulatory certainty for providers and students alike. The legislation also updates federal law to recognize these financing models and support their responsible use in workforce training and higher education.

The legislation is supported by Jobs for the Future, Better Future Forward, Western Governors University, Social Finance, Progressive Policy Institute, The Forward Fund, Student Freedom Initiative, and Pursuit.

"As federal borrowing limits tighten under the One Big Beautiful Bill Act, more students will face financing gaps and be left with few options but private loans that often charge higher rates to students from low-income backgrounds and lack meaningful protections for these borrowers. JFF applauds Senators Young and Warner and Representatives Houchin and Torres for introducing the Outcomes-Based Financing for Students Act of 2026, which would expand access to more flexible, student-centered financing options while protecting students from bad actors. This legislation recognizes both the promise and the risks of outcomes-based financing and takes a thoughtful approach by clarifying existing regulatory guardrails and establishing strong consumer protections tailored to these models. By doing so, it creates a pathway for responsible innovation that can improve affordability, accountability, and access across higher education and workforce training that is essential for economic advancement." - Maria Flynn, President and CEO of Jobs for the Future

"Well-designed outcomes-based financing (OBF) programs open up support for students underserved in the current system, and they do so in a way that is affordable and aligned to students' educational and career success. To ensure all students are protected and can benefit from these options, we need a strong, well-designed consumer protection framework built around the risk-sharing nature of OBF programs. This bipartisan legislation is a strong step forward in that regard, and we commend Sens. Young and Warner and Reps. Houchin and Torres for their work on it." - Kevin James, CEO of Better Future Forward

"This bipartisan bill would ensure that learners are not hit with an unexpected tax bill if their post-training earnings aren't high enough to trigger a repayment obligation. Lower-income individuals who have complied fully with their repayment agreements should not be penalized simply because the program's protections worked as intended. This common-sense protection is essential to realizing the risk-sharing promise of outcomes-based financing to align funding with learners' job success." - Tracy Palandjian, CEO & Co-Founder of Social Finance

"PPI has long supported bold and innovative models for higher education financing, and the Outcomes-Based Financing for Students Act of 2026 is exactly that. This approach allows borrowers of all backgrounds to finance their own postsecondary education or training with the future earnings that investment enables, while also improving borrower protections in the private market and supporting only the programs that lead to improved career outcomes and increased earnings." - Michael Pearson, Director of Workforce Development Policy for the Progressive Policy Institute

"Students should not have to take on unaffordable risk to access education that leads to opportunity. Outcomes-based financing represents a student-first approach-one that defers repayment until success is realized and aligns financing with real labor market outcomes. We commend this bipartisan effort to bring clarity, consistency, and consumer protections to this emerging space, and to create a pathway for responsible innovation that expands access to economic mobility." - Susie Sewell, Director of Strategy and Policy at The Forward Fund

"We applaud Senators Warner and Young, alongside Representatives Houchin and Torres for championing the Outcomes-Based Financing for Students Act of 2026 to improve outcomes-based financing programs. By establishing clear guidelines for lenders and strong protections for students, this bipartisan legislation aligns with Student Freedom Initiative's mission to expand access to education and help eliminate the structural and societal barriers that contribute to the wealth gap in the United States." - Keith Shoates, President and CEO of Student Freedom Initiative

Read bill text here.