How long before loans to D-grade students are securitized and sold with a triple A rating to dumbass pension fund managers?
Income-sharing agreements let students trade future earnings for investment
11–20 of 264 posts
Re: Income-sharing agreements let students trade future earnings for investment
#12I wonder if premiums are higher for women due to increased likelihood of just becoming a housewife and providing no income?
Correct me if I’m wrong but the anecdote in the front is also a much worse deal than the table later on. 279/month = 3,348/year. Thats 6.7% of her 50k salary, which is before tax to begin with.
Tons of other loopholes I’m curious about. Like salary vs other comp?
Re: Income-sharing agreements let students trade future earnings for investment
#13Am I reading this right? You have to pay 2.5% of your income for 7 years as a comp sci graduate for a loan of only $10k. Seems like a pretty terrible deal. Edit: Avg comp sci grad salary from Purdue is $72k, assuming 5% raises on average including promotions, you'd pay about $14.6k for this loan, which is roughly equivalent to a loan with an 11% interest rate per year over 88 months. Edit2: I was a business major, an…
It is a terrible deal. Lambda School’s stipend programme (places limited) pays students $2,000 a month for the nine months of their job training, while they get trained 40 hours a week and that includes interview prep and placement and job search help that makes university careers offices look like they’re going through the motions, not trying to get the students a job.
And after paying students $18,000 and spending nine months getting them job ready and helping them find a job they only have to pay back
> Upon completion of the program, students will pay 10% of their salary for a five year period once they're making at least $50,000 per year. The max possible payment is capped at $50,000.
https://lambdaschool.com/stipend/
Or if you don’t get the stipend
> There are no up-front costs required to attend Lambda School; we only get paid when you do. Once you’re earning at least $50k per year you’ll pay back 17% of your income for the first two years.
> Total tuition possible is capped at a maximum of $30k, so no matter how much you’re getting paid the most you could possibly pay is $30k.
Re: Income-sharing agreements let students trade future earnings for investment
#14I love this idea, but perhaps these kinds of financing should be offered by university endowments or by government funds? In fact, it might be useful to replace student loans with this mechanism to align long-term incentives of universities & their students. This sort of financing might also lead to a better understanding of what sort of programs are effective. I could see financing being available for particular pro…
Yeah, let’s prop up the government and hedge funds with attached research arms. We should ignore the private companies that are already using ISAs, like Lambda School, to help people get job training to change their lives for the better and just assume that not for profits and the government will do things right because they have only the purest motives. That worked out so well for the taxpayers and citizens of the U…
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Re: Income-sharing agreements let students trade future earnings for investment
#15I love this idea, but perhaps these kinds of financing should be offered by university endowments or by government funds? In fact, it might be useful to replace student loans with this mechanism to align long-term incentives of universities & their students. This sort of financing might also lead to a better understanding of what sort of programs are effective. I could see financing being available for particular pro…
Yeah, let’s prop up the government and hedge funds with attached research arms. We should ignore the private companies that are already using ISAs, like Lambda School, to help people get job training to change their lives for the better and just assume that not for profits and the government will do things right because they have only the purest motives. That worked out so well for the taxpayers and citizens of the U…
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Re: Income-sharing agreements let students trade future earnings for investment
#16Can you say adverse selection?
Re: Income-sharing agreements let students trade future earnings for investment
#17The obvious point to make is that American student loans already suck so this may be an alternative. However, this makes me feel really uncomfortable. The first is the same reason as student loans: At the age you're agreeing this you are very unlikely to correctly judge your own value. It's the same reason why students take on ridiculously onerous student loans. The solution to that problem in my mind though is to re…
15% on student debt? Jesus christ - it's more expensive than unsecured lending / credit card debt
Re: Income-sharing agreements let students trade future earnings for investment
#18The obvious point to make is that American student loans already suck so this may be an alternative. However, this makes me feel really uncomfortable. The first is the same reason as student loans: At the age you're agreeing this you are very unlikely to correctly judge your own value. It's the same reason why students take on ridiculously onerous student loans. The solution to that problem in my mind though is to re…
15% on student debt? Jesus christ - it's more expensive than unsecured lending / credit card debt
Credit card interest rates can easily approach 25% for those who don't pay off their balance.
Re: Income-sharing agreements let students trade future earnings for investment
#19The obvious point to make is that American student loans already suck so this may be an alternative. However, this makes me feel really uncomfortable. The first is the same reason as student loans: At the age you're agreeing this you are very unlikely to correctly judge your own value. It's the same reason why students take on ridiculously onerous student loans. The solution to that problem in my mind though is to re…
>Purdue, for example, caps total payments at 2.5 times what a student borrowed, so the most successful don’t feel gouged. That would be a 15 year loan at 15% APR. That IS gouging.
15% APR isn't gouging. That's a typical APR for an unsecured personal loan, which this is. Well, it's actually worse than an unsecured loan for the lender since payment is tied to employment. So, not egregious.
It's also not 15 years. The term maxes out at less than 10 years for English majors. The person being interviewed is on the hook for 8 and a half years.
EDIT: Where did you even get the 15% APR from? 2.5 times what the student borrowed does not work out to 15%, unless the debt is paid off in under 7 years.
A 15% APR over 15 years would be over 8 times the original loan amount.
Re: Income-sharing agreements let students trade future earnings for investment
#20The obvious point to make is that American student loans already suck so this may be an alternative. However, this makes me feel really uncomfortable. The first is the same reason as student loans: At the age you're agreeing this you are very unlikely to correctly judge your own value. It's the same reason why students take on ridiculously onerous student loans. The solution to that problem in my mind though is to re…
The other consideration is that it makes investors incentivized to get you to succeed (at least as far as salary is concerned). That could be a huge advantage if you manage to get the right investors.
Of course I also wonder if it's only a matter of time before a short market emerges - which it will - if investors need to hedge against a recession or something that would not be covered by traditional insurance products.