New way to finance college

[cawacko]

If you don't see a difference they why not go with the government instead of some private investor?

In this case Vemo is offering much more affordable rates, especially if you plan on going into a low paying profession

 

[cawacko]

The same way it does with other things. Starts of legit and a good idea, some shady outfit figure out a loophole....shady lawyers invest. CA, I like the basic premise of the idea. I think you also brought up a good topic. It just seems that this could get
kind of ugly kind of fast. The good ideas always do.

Fair enough. I think it's an interesting topic since student debt is a huge issue and we could see some major defaults in the next decade. Tech is trying to disrupt many markets and it's not surprising student debt is one of the targets.

Who are the lawyers going to go after here? The schools suing the students? That would not be a good look.

 

[Sailor]

Fair enough. I think it's an interesting topic since student debt is a huge issue and we could see some major defaults in the next decade. Tech is trying to disrupt many markets and it's not surprising student debt is one of the targets.

Who are the lawyers going to go after here? The schools suing the students? That would not be a good look.

No one. They would make investments for clients through the inevitable shady companies. That is when things would get ugly with the expectation of investment returns. I do agree with you about student debt, it financially crippling too many young people in this country.

 

[cawacko]

No one. They would make investments for clients through the inevitable shady companies. That is when things would get ugly with the expectation of investment returns. I do agree with you about student debt, it financially crippling too many young people in this country.

Maybe I'm looking at this through too narrow of a scope but Universities have to reach agreement with Vemo before loans could be offered to students. That's how this would work. If Vemo runs out of funding I'm not sure who gets sued.

 

[TTQ64]

Fair enough. I think it's an interesting topic since student debt is a huge issue and we could see some major defaults in the next decade. Tech is trying to disrupt many markets and it's not surprising student debt is one of the targets.

Who are the lawyers going to go after here? The schools suing the students? That would not be a good look.

Or, that filthy rich investor can pay his portion of taxes, retrofitted preferably. Also, we could tax religion since they don't want to separate from the state.

That should cover free tuition, healthcare and lot's of new developments for low income housing.

One day you nut jobs will realize tax cuts and tax breaks mean less revenue.

 

[tinfoil]

Riiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiight.

And depending on who holds your "note" you could wind up with your arm broken, maybe get a kneecap shattered, or maybe even wind up dead.

LOL
Is the Mafia involved? You are paranoid. If you don't pay them, I assume the terms of the agreement would likely allow them to garnish your wages. At least you could have the debt discharged in bankruptcy unlike student loans.

 

[cawacko]

Or, that filthy rich investor can pay his portion of taxes, retrofitted preferably. Also, we could tax religion since they don't want to separate from the state.

That should cover free tuition, healthcare and lot's of new developments for low income housing.

One day you nut jobs will realize tax cuts and tax breaks mean less revenue.

Friend, you are going off the wire here

 

[cawacko]

CFM, this topic woukdnt appeal to you because you don't know what college is right?

 

[Althea]

playing devil's advocate what's the difference than owing the government $100K+ upon finishing school?

Well, the OP was light on specifics, so it's hard to make that case.

I believe the lion's share of college debt is from housing/meals, as opposed to tuition. Reducing cost of books, or even doing away with that cost would help a lot too.

Address those issues, and you're on your way to solving the problem. Next, stop the vacation aspect of college. Throughout history, college was what every high school student planned for, given that the costs were much more easier to accept. Wealthy families had no problem funding these 4 year deferments from joining society.

With costs what they are now, many students would do better to decide if college is really in their best interest.

 

[cancel2 2022]

Riiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiight.

And depending on who holds your "note" you could wind up with your arm broken, maybe get a kneecap shattered, or maybe even wind up dead.

You are a truly absurd man!!

Sent from Lenovo K5 Note:
To piss off snowflakes, bottom feeders and racists

 

[cancel2 2022]

CFM, this topic woukdnt appeal to you because you don't know what college is right?

I asked him several times to tell me what degree(s) he had, but he declined to answer. No great surprise there!

Sent from Lenovo K5 Note:
To piss off snowflakes, bottom feeders and racists

 

[Micawber]

You'd be sued, just the same. The fun part would be if someone sued for specific performance, then the ugly comparisons to indenture and slavery would be voiced by defense counsel.

The way they should do this is the co-obligor/lender should have to also be in a position to actually employ the students and the lending business for training should subordinate in importance to the business model or purpose. Sort of like GE as to GE Capital etc etc

 

[Teflon Don]

Anyone have much student debt in their days? What would you think of this option if it was available to you back when?




This controversial way to finance college may be getting more popular

These students pay for college by selling a percentage of their future income to a backer



It soon may get easier for students to finance college by selling a share in their future selves.

Purdue University is partnering with Vemo Education, a technology firm, in hopes of spreading an alternative form of college financing pioneered at Purdue last year. The product, known as an income-share agreement or ISA, allows students to pay for college by selling a percentage of their future income to a backer, instead of paying out right or taking on debt. Typically, students who go into more lucrative fields pay a smaller percentage of their income during repayment, while students who go into less lucrative fields pay a larger share.

The West Lafayette, Ind.-based public college launched the first college-backed ISA for its students last year to much fanfare and immediately began hearing from other schools interested in offering ISAs of their own, according to the school’s president, Mitch Daniels. The partnership announced Thursday is an effort to help these schools get their own programs off the ground by allowing them to use Purdue’s program as a model and Vemo’s technology to more easily provide students with ISAs, without having to start from scratch.

It’s also a sign of a growing interest and market around this product amid concern about the consequences of having millions of borrowers saddled with student loan debt. “Clearly there’s a need for alternatives,” said Daniels, a former Republican governor of Indiana. “We’ve never suggested this is a complete one, but I believe it can only be helpful if it spreads and grows.”


ISAs have been growing in popularity, at least among conservative circles, for the past few years. The benefit of this type of arrangement, supporters say, is that it better protects students from bad luck. One major downside is that because of the way ISAs are structured, students might wind up paying more than if they took on a loan. The typical term for an ISA is 10 years, so a graduate who pursues a lucrative field of study could wind up paying more because the amount of income they pay out over the 10 years could exceed the amount they needed to pay for school. What’s more, the optics of a young person selling stock in themselves are not great.

Students and parents are often initially skeptical of ISAs when they’re first explained, but once asked to compare them to an equivalent loan, they typically prefer ISAs, according to Jason Delisle, a resident fellow at the American Enterprise Institute, a conservative think tank, who has surveyed families on the topic. Though the current ISA market is still pretty small, Delisle said his data indicates that “there’s potential for them to catch on.”


The Purdue-Vemo partnership can help speed up that growth. By providing both the technology and trusted advice from an academic peer who has experience with the product they can make colleges more comfortable with offering an ISA, said Tonio DeSorrento, Vemo’s chief executive.

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But one major obstacle preventing ISAs from becoming more widespread is the regulatory environment surrounding them, Delisle said. Right now, it’s unclear how they’ll be monitored and what kind of consumer protections they’ll be required to abide by, he said. Though there are signs that could soon be changing. Republican lawmakers have floated bills that would regulate ISAs and a more conservative, free-market focused administration may be more open to this kind of product.

“I see no reason to doubt that the new Department of Education will be friendlier to innovations like this,” Daniels said.

Sheila Bair, the president of Washington College, a small liberal arts college in Chestertown, Maryland, said she’s “hopeful” the new administration will be more open to using ISAs to address our student debt woes. Though the government currently offers students the option to make loan payments that are tied to their income, opting for one of these plans stretches out the term and allows the interest to build. These programs also offer debt forgiveness after a certain number of years of repayment, but that discharge typically comes with a tax bill.

“It’s all been very difficult for students I think,” said Bair, the former chairwoman of the Federal Deposit Insurance Corporation. At her school officials are looking into the possibility of offering ISAs to their students, Bair said. They’ve built some models and talked to donors about it. “We’re working on it, were not ready to launch yet, but I would love to,” she said.

Even if ISAs become more widespread at colleges across the country, students will still likely be coping with debt. Daniels and Bair both see ISAs in their current form as an alternative to private loans or parent loans, not federal student loans, which offer relatively low interest rates and many protections.

But more widespread adoption of ISAs would help relieve parents of the burden of taking on debt and risk for their students to attend college, Delisle said. When a student hits the federal loan borrowing limit — a maximum of $31,000 for five years of school for the typical student — they turn to a private loan which typically needs to be cosigned by a parent or the parents take on debt in their own name. An ISA could replace those options.

“Parents are on the hook if students borrow more than the federal limit and to the extent we think that’s problematic, an ISA is really the only alternative to somehow removing the parents from the calculation,” he said



http://www.marketwatch.com/story/th...-getting-more-popular-2017-03-09?siteid=nwhpf

It sounds like someone woke up with the idea of creating Prosper for college education. This is a horrendous idea and is frought with unintended consequences (which I am sure the OP will just brush aside as being silly)

First the illusion that the "risk" is shifted to the school and the investor. That is just crazy on its face. Investors go into a venture with one thing in mind and that is to make money. Any other notion is just happy talk designed to confuse the uneducated.

The article posted by the OP was short on details on how this really works, so the best I could glean is that 'The typical term for an ISA is 10 years'.

The first potential problem is that some students could potentially pay back MORE than if they had taken a traditional student loan in the first place
The second potential problem is that knowing the future job prospects of a college graduate is highly risky and variable. Just having a college degree does not translate into a lucrative salary. Therefore as an investor, I am going to want to have that risk priced into this which means a higher percentage of that person's income.
What is the backside protection for the investor if junior decides not to pay?

This is just another example of people who think they are smart coming up with crazy ideas that can have devastating effects downstream. The real problem with college affordability is the federal government being involved in the first place. Subsidized student loans and grants have allowed colleges to jack up prices without repercussion because people have bought into the illusion that the only way to make money is with a college degree. So instead of dealing with the real problem let's create a crazy idea that is loaded with unintended consequences.

Here is a thought. Forget college. Have junior become an electrician. They can make six figures and their job can't be outsourced to India

 

[tsuke]

It sounds like someone woke up with the idea of creating Prosper for college education. This is a horrendous idea and is frought with unintended consequences (which I am sure the OP will just brush aside as being silly)

First the illusion that the "risk" is shifted to the school and the investor. That is just crazy on its face. Investors go into a venture with one thing in mind and that is to make money. Any other notion is just happy talk designed to confuse the uneducated.

The article posted by the OP was short on details on how this really works, so the best I could glean is that 'The typical term for an ISA is 10 years'.

The first potential problem is that some students could potentially pay back MORE than if they had taken a traditional student loan in the first place
The second potential problem is that knowing the future job prospects of a college graduate is highly risky and variable. Just having a college degree does not translate into a lucrative salary. Therefore as an investor, I am going to want to have that risk priced into this which means a higher percentage of that person's income.
What is the backside protection for the investor if junior decides not to pay?

This is just another example of people who think they are smart coming up with crazy ideas that can have devastating effects downstream. The real problem with college affordability is the federal government being involved in the first place. Subsidized student loans and grants have allowed colleges to jack up prices without repercussion because people have bought into the illusion that the only way to make money is with a college degree. So instead of dealing with the real problem let's create a crazy idea that is loaded with unintended consequences.

Here is a thought. Forget college. Have junior become an electrician. They can make six figures and their job can't be outsourced to India

The real problem with college affordability is the federal government being involved in the first place. Subsidized student loans and grants have allowed colleges to jack up prices without repercussion because people have bought into the illusion that the only way to make money is with a college degree. So instead of dealing with the real problem let's create a crazy idea that is loaded with unintended consequences.

quoted for truth. This is the part everybody misses.

coke and pepsi cant charge 1000 per bottle but if the government were paying for it they could.

 

[cawacko]

It sounds like someone woke up with the idea of creating Prosper for college education. This is a horrendous idea and is frought with unintended consequences (which I am sure the OP will just brush aside as being silly)

First the illusion that the "risk" is shifted to the school and the investor. That is just crazy on its face. Investors go into a venture with one thing in mind and that is to make money. Any other notion is just happy talk designed to confuse the uneducated.

The article posted by the OP was short on details on how this really works, so the best I could glean is that 'The typical term for an ISA is 10 years'.

The first potential problem is that some students could potentially pay back MORE than if they had taken a traditional student loan in the first place
The second potential problem is that knowing the future job prospects of a college graduate is highly risky and variable. Just having a college degree does not translate into a lucrative salary. Therefore as an investor, I am going to want to have that risk priced into this which means a higher percentage of that person's income.
What is the backside protection for the investor if junior decides not to pay?

This is just another example of people who think they are smart coming up with crazy ideas that can have devastating effects downstream. The real problem with college affordability is the federal government being involved in the first place. Subsidized student loans and grants have allowed colleges to jack up prices without repercussion because people have bought into the illusion that the only way to make money is with a college degree. So instead of dealing with the real problem let's create a crazy idea that is loaded with unintended consequences.

Here is a thought. Forget college. Have junior become an electrician. They can make six figures and their job can't be outsourced to India

Why would I brush it aside as being silly? I like the idea of trying to disrupt the market but there is no guarantee this will work. I would be interested to see what the companies big picture plans are in terms making a profit or just having the goal of being acquired.

 

[Rune]

You guys are old thinking 'Vinny' from the corner is going to come after you. And Zap, you can't have an honest conversation. You just said the student could end up dead. Did you read the article? Purdue is already working with Vemo on this. If you think a student could end up dead then Purdue and Vemo are sanctioning that.

This is another tech disrupter trying to get into a market. I'm not smart enough to know if it will succeed. But the idea is getting a lot of ink in tech publications and I've yet to see anyone write that the student's life would ultimately be in danger.

No this a sign that capitalists are desperate for places to invest again.

 

[Althea]

The real problem with college affordability is the federal government being involved in the first place. Subsidized student loans and grants have allowed colleges to jack up prices without repercussion because people have bought into the illusion that the only way to make money is with a college degree. So instead of dealing with the real problem let's create a crazy idea that is loaded with unintended consequences.

quoted for truth. This is the part everybody misses.

coke and pepsi cant charge 1000 per bottle but if the government were paying for it they could.

Not really. The problem was the govt. giving money to banks for nothing, and the banks raping students in the process.

 

[cawacko]

No this a sign that capitalists are desperate for places to invest again.

Finding opportunity equals desperation to you?

 

[cawacko]

Not really. The problem was the govt. giving money to banks for nothing, and the banks raping students in the process.

So it is the banks, not the federal gov't, that decided to get the gov't so heavily involved in student lending? That's a new take

 

[tsuke]

So it is the banks, not the federal gov't, that decided to get the gov't so heavily involved in student lending? That's a new take

its very similar to the mortgage crisis. Lots of loans to people with no ability to pay just because.