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How to Build an Income Sharing Agreement Product

moderntreasury.com

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Re: How to Build an Income Sharing Agreement Product

#21

Post by aripickar »

The currently proposed legal framework for ISA's[0] seems like it would make ISA's dischargeable in bankruptcy, which would likely cause all sorts of issues with people signing up for them, using them to pay for tuition, and then immediately taking on as much delinquent debt to declare bankruptcy. That seems like a very perverse incentive for schools to deal with, since degree's are permanent but bankruptcy only stays on your credit report for a bit.

[0] https://www.forbes.com/sites/alisongriffin/2019/07/18/a-rare...

Re: How to Build an Income Sharing Agreement Product

#22

Post by tathougies »

mdorazio wrote: post #2

Is it just me or does it seem like we're now one step closer to turning people into companies with shares that can be bought and sold? It feels like a small step from ISAs for education funding to ISAs for all kinds of funding instead of traditional loan agreements and at that point you might as well sell shares of yourself to the highest bidder so they can trade your future income on a secondary market. (Note this i…

Perhaps it is. However, interestingly to note, most religions, like traditional Christianity and Islam, would actually be okay with an income sharing system (especially if the share was redeemable and payments set up to accomplish this) as opposed to an interest based system. It is unclear that an income sharing system is any morally worse than an interest bearing one, and there are reasons to think it is better.

Re: How to Build an Income Sharing Agreement Product

#23

Post by danenania »

tathougies wrote: post #22
mdorazio wrote: post #2

Is it just me or does it seem like we're now one step closer to turning people into companies with shares that can be bought and sold? It feels like a small step from ISAs for education funding to ISAs for all kinds of funding instead of traditional loan agreements and at that point you might as well sell shares of yourself to the highest bidder so they can trade your future income on a secondary market. (Note this i…

Perhaps it is. However, interestingly to note, most religions, like traditional Christianity and Islam, would actually be okay with an income sharing system (especially if the share was redeemable and payments set up to accomplish this) as opposed to an interest based system. It is unclear that an income sharing system is any morally worse than an interest bearing one, and there are reasons to think it is better.

Given that interest-bearing loans eventually convert to ISAs if they aren't paid (through wage garnishment), it seems hard to argue that they aren't strictly worse for the borrower.

Re: How to Build an Income Sharing Agreement Product

#24

Post by yowlingcat »

throwaway_law wrote: post #19
yowlingcat wrote: post #13

Earlier quoted context omitted.

Student loan forgiveness would be great, as would be free tuition, but do you mean on a federal level? I'd love to see such a policy come to fruition.

I don't want to make it about politics or a politician, but you can search for their campaign platform proposal for additional details. As far as I know there is only one candidate running on this platform of student loan forgiveness, so it should come up quickly in a search.

It's great to have a presidential candidate that is running on this platform (and I think I know which one you're talking about), but I'm more interested in whether the broad coalition in congress exists, or whether it's being formed. There are a few members of congress I can think of, but not in remotely the size necessary to pull this off.

Re: How to Build an Income Sharing Agreement Product

#25

Post by danenania »

mattmarcus wrote: post #6

I find it interesting the recent rapid rise of ISAs. I remember back in 2013/14, hearing Upstart pitch to my college for their ISA program. From what I recall, their pitch fell mostly on deaf ears. You can still see their ISA agreement online funnily enough: https://www.upstart.com/funding_terms But they discontinued it in 2014: https://slate.com/business/2014/05/upstart-pulls-income-shar... It's not clear to me why…

I think the tech boom/talent shortage has a lot to do with it. It seems fairly unprecedented that a smart person with no education can take a ~1 year course, then reliably expect to be making a significantly above average salary immediately, and a six figure salary within a few years.

Re: How to Build an Income Sharing Agreement Product

#26

Post by journalctl »

aripickar wrote: post #21

The currently proposed legal framework for ISA's[0] seems like it would make ISA's dischargeable in bankruptcy, which would likely cause all sorts of issues with people signing up for them, using them to pay for tuition, and then immediately taking on as much delinquent debt to declare bankruptcy. That seems like a very perverse incentive for schools to deal with, since degree's are permanent but bankruptcy only stay…

Clearly default and a lifetime of ruined credit is the better option.

Re: How to Build an Income Sharing Agreement Product

#27

Post by TimPC »

Spooky23 wrote: post #15

How gross. Seems like a poorly thought out product -- isn't my incentive here as a borrower to avoid making documentable income?

Or setup a contracting corporation, accumulate your consulting income in the corporation. Have a home office. Pay yourself as little as possible to cover living expenses during the 5 year period and accumulate all the capital in your corporation. Pay your 10% on that small amount. Cash out the corporation afterwards, possibly over several years to lower tax burden.

Re: How to Build an Income Sharing Agreement Product

#28

Post by rtkwe »

Spooky23 wrote: post #15

How gross. Seems like a poorly thought out product -- isn't my incentive here as a borrower to avoid making documentable income?

Sure it's vaguely does but most fields people would go into for college degrees don't generally do work undocumented. Also the loan company has an opposite incentive to track down anyone doing that and unlike the IRS they're not hamstrung by Congressional attempts to bleed them dry.

Re: How to Build an Income Sharing Agreement Product

#29

Post by pc86 »

journalctl wrote: post #26
aripickar wrote: post #21

The currently proposed legal framework for ISA's[0] seems like it would make ISA's dischargeable in bankruptcy, which would likely cause all sorts of issues with people signing up for them, using them to pay for tuition, and then immediately taking on as much delinquent debt to declare bankruptcy. That seems like a very perverse incentive for schools to deal with, since degree's are permanent but bankruptcy only stay…

Clearly default and a lifetime of ruined credit is the better option.

Literally nothing can result in a lifetime of ruined credit other than a lifetime of not paying your bills.
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