New way to finance college

cawacko said:
I didn't have to, I was lucky.

I have not said this company is going to be successful or this is the answer to financing education going forward. But considering the amount of student that exists right now it is not a surprise that tech firms would be targeting this market.
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Damned skippy you were. I borrowed nearly $40,000 grand for my education, granted over 25 grand was for grad school and paid, including interest and penalties around $60 grand over 20 years (both undergrad and grad school combined). That's about the price of a BMW 5 series. I'd say that was worth it both in terms of the income derived and the enlightenment learned.

Exploiting would be a better word. Is what they are offering less than the 15 percent of income for 10 years and the balance forgiven by current Federal programs? Owing someone a percentage for the rest of your life seems pretty extreme.
 
Norah said:
I think a big way to reduce the cost burden on students is to make degree plans more efficient and less broad. For example as a livestock management major there's no logical reason why I should have to take classes in areas like literature, sociology, psychology, philosophy, art, history, and other courses unless they can be directly tied to my major. Thousands of dollars goes towards taking basic level classes that often times do not have anything to do with your major. I also don't think that college is for everyone and that the option of going into a trade school is an overlooked thing.
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And a lot less well rounded educationally. I think that's a poor idea honestly. When I was in school I pretty much thought anything outside of my science classes was a waste of my time. Now that I"m older and can look back with a lot more of life's experience and wisdom do I realize how dead wrong I was and how valuable those classes were. I agree with specialization for graduate studies but not for undergraduate studies. I think there's a heck of a lot more fat that can be trimmed from academia without sacrificing the liberal arts mission to make you a more well rounded and enlightened person. I'm glad I took communication, education, social sciences and liberal arts classes. I'd be a dreadfully boring person if I had only focused on science (ok...I just served a big fat softball set up for a cheap shot. LOL).

As for trade school....I agree whole heartedly if that's where your heart lies but that doesn't change the cost aspect. Top trade schools like NASCAR's automotive program cost a crap load of money too.
 
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Althea said:
Your article was short on specifics. That's what banks have offered throughout history, vs. what the govt was offering before funding was cut.
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I posted two articles on this company. It has nothing to do with banks. It's about a tech fund trying to disrupt this market that the contribution of gov't involvement has made college immensely expensive.
 
cawacko said:
And that's what you think this company is offering?
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Depends on what the total payoff of the loan is? I think you add those numbers up given the percentage and a persons life time income and that would be a huge #.

Say it's 5% for the rest of your life and you earn a technical degree where you'll average $75 kpy over 40 years and your student loan debt was $60,000. You're total payoff would be $150,000. No versus 6% at 10 years for a student loan where your total payoff is $80,000. That's a $70,000 difference.
 
cawacko said:
I posted two articles on this company. It has nothing to do with banks. It's about a tech fund trying to disrupt this market that the contribution of gov't involvement has made college immensely expensive.
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You are being unduly chastised for bringing up a good subject. There has to be other ways to keep higher education affordable right? Anyone commenting on this thread have any solutions?
 
Sailor said:
You are being unduly chastised for bringing up a good subject. There has to be other ways to keep higher education affordable right? Anyone commenting on this thread have any solutions?
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The truth is that schemes like this enable the high costs.
 
cawacko said:
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.

Don’t miss: The battle for student-debt forgiveness by young farmers goes local

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
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I had a very interesting and no cost to me way of financing college. It was called academic and athletic scholarships. I didn't owe anyone anything or sell myself to them. I kept all the shares.

If someone thinks this is a good idea for them, I wouldn't dare tell them otherwise. If someone chooses this path, what I do know is it's a far better suggestion that the Democrat plan of "free college" where taxpayers would get the bill for a kid's college whose own parents didn't think he/she was a good investment.
 
Mott the Hoople said:
Depends on what the total payoff of the loan is? I think you add those numbers up given the percentage and a persons life time income and that would be a huge #.

Say it's 5% for the rest of your life and you earn a technical degree where you'll average $75 kpy over 40 years and your student loan debt was $60,000. You're total payoff would be $150,000. No versus 6% at 10 years for a student loan where your total payoff is $80,000. That's a $70,000 difference.
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This is a ten year term, not a life time one
 
Rune said:
The truth is that schemes like this enable the high costs.
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I agree in general and said so earlier. Maybe not this particular company but I can certainly see it happening. So what do you think? Any ideas? I always thought there should be a program similar to the military however for a civil service. Do a few years, the federal government helps pay for college.
 
Mott the Hoople said:
Depends on what the total payoff of the loan is? I think you add those numbers up given the percentage and a persons life time income and that would be a huge #.

Say it's 5% for the rest of your life and you earn a technical degree where you'll average $75 kpy over 40 years and your student loan debt was $60,000. You're total payoff would be $150,000. No versus 6% at 10 years for a student loan where your total payoff is $80,000. That's a $70,000 difference.
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What matters is the one going to college is taking the responsibility for paying for it on their own behalf. It's much better than the Democrat plan of "free college" where the taxpayers would be forced to fund college for someone whose own parents didn't think he/she was a good investment.
 
Rune said:
The truth is that schemes like this enable the high costs.
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I don't give a shit what they do to pay for college as long as the taxpayers don't get the cost as would have been the case with the Democrat "free college" plan.
 
cawacko said:
CFM, this topic woukdnt appeal to you because you don't know what college is right?
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You're are correct and incorrect at the same time. It wouldn't appeal to me because academic and athletic scholarships paid for everything. In others words, I know exactly what college is just not the part about having to sell myself for the funding of it.
 
domer76 said:
CFM:

"College? What's college? That there 8th grade are all anyone needs! Best three years of my life!"
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College is something that you could only do because affirmative action put you ahead of a higher qualified white person.
 
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