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Income-sharing agreements let students trade future earnings for investment

bloomberg.com

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Re: Income-sharing agreements let students trade future earnings for investment

#31

Post by maccard »

econ101fail wrote: post #26
maccard wrote: post #23

Earlier quoted context omitted.

> 15% APR isn't gouging. That's a typical APR for an unsecured personal loan, which this is. My credit card is 15%. An unsecured personal loan is more like 4-9%.

Please show me where an unemployed person with uncertain future prospects and neither a work history nor any assets can get an unsecured personal loan for 4-9%? I'll even give you a pass on the requirements of the loan payback being subject to employment or a minimum income, a payment cap or a term limit. Adding to the above, as noted the edit to my previous comment, even the 15% APR number is wrong in general. An En…

> Please show me where an unemployed person with uncertain future prospects and neither a work history nor any assets can get an unsecured personal loan for 4-9%?

Every high street bank in the UK offers a student overdraft facility, e.g. HSBC[0] offers a guaranteed £1000 0% overdraft, with up to £3000 depending on how long you've had it. Other banks offer credit cards with 0% interest for students too.

Finally, student's aren't the same category as > an unemployed person with uncertain future prospects and neither a work history nor any assets

While that is a technically true statement, it's ignoring the fact that [0] https://www.hsbc.co.uk/current-accounts/products/student/

Re: Income-sharing agreements let students trade future earnings for investment

#32

Post by leetcrew »

TadaScientist wrote: post #17
Traster wrote: post #10

The 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

first, student debt is unsecured lending. second, where are you getting a credit card with less than 15% APR. I want one too.

Re: Income-sharing agreements let students trade future earnings for investment

#34

Post by digitaltrees »

leetcrew wrote: post #32
TadaScientist wrote: post #17

Earlier quoted context omitted.

15% on student debt? Jesus christ - it's more expensive than unsecured lending / credit card debt

first, student debt is unsecured lending. second, where are you getting a credit card with less than 15% APR. I want one too.

Student loans can’t be discharged in bankruptcy and are often backed by the government so a default gets paid in full. Basically, effectively secured.

Re: Income-sharing agreements let students trade future earnings for investment

#35

Post by saint_fiasco »

b_tterc_p wrote: post #12

I 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?

If they are going to be cynical about it, maybe they should consider household income instead of just personal salary so they can collect from women who, due to higher education, can marry a richer husband than they could without the education.

Re: Income-sharing agreements let students trade future earnings for investment

#36

Post by b_tterc_p »

saint_fiasco wrote: post #35
b_tterc_p wrote: post #12

I 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?

If they are going to be cynical about it, maybe they should consider household income instead of just personal salary so they can collect from women who, due to higher education, can marry a richer husband than they could without the education.

I don’t think that could be enforceable.

It would also create weird incentives. If two people have these loans, and they get married... would their payments double?

Re: Income-sharing agreements let students trade future earnings for investment

#37

Post by ac29 »

leetcrew wrote: post #32
TadaScientist wrote: post #17

Earlier quoted context omitted.

15% on student debt? Jesus christ - it's more expensive than unsecured lending / credit card debt

first, student debt is unsecured lending. second, where are you getting a credit card with less than 15% APR. I want one too.

The credit card I have via my credit union has a 13.24% APR. I'm fairly sure that's pretty normal if you have good credit and pay on time - I certainly didn't go out of my way to look for a low interest card.

Re: Income-sharing agreements let students trade future earnings for investment

#38

Post by mindslight »

ejlangev wrote: post #30

Fitting that in a world where all the same old labor fights that were settled in the past are happening again that someone would un-ironically invent a new form of indentured servitude. Makes me laugh at people who think that non STEM subjects have no value. Perhaps opening a book in one of those non STEM fields once in a while would help you avoid reinventing things consigned to the dust bin of history without reali…

Computer Science itself is rife with reinvention of its own concepts, so I don't think wider reading would change much.

Furthermore, banksters aren't coming up with these mortal-debt schemes due to not knowing history or ethics, but because owning people is quite lucrative.

As far as mortal debt schemes go, this actually seems nicer than student loans denominated in straight dollars. But of course it will be nicer to start off - longer term it will probably converge on a similar income siphon as traditional loans, just with a nice bonus payday when one of the subjects makes it big.

Re: Income-sharing agreements let students trade future earnings for investment

#39

Post by econ102fail »

maccard wrote: post #31
econ101fail wrote: post #26

Earlier quoted context omitted.

Please show me where an unemployed person with uncertain future prospects and neither a work history nor any assets can get an unsecured personal loan for 4-9%? I'll even give you a pass on the requirements of the loan payback being subject to employment or a minimum income, a payment cap or a term limit. Adding to the above, as noted the edit to my previous comment, even the 15% APR number is wrong in general. An En…

> Please show me where an unemployed person with uncertain future prospects and neither a work history nor any assets can get an unsecured personal loan for 4-9%? Every high street bank in the UK offers a student overdraft facility, e.g. HSBC[0] offers a guaranteed £1000 0% overdraft, with up to £3000 depending on how long you've had it. Other banks offer credit cards with 0% interest for students too. Finally, stude…

(1) You cannot use a UK high street bank to finance a US student loan

(2) 1000 GBP or even 3000 GBP is not nearly enough to pay for college

Students which are likely to use this type of financing are very much in the same category as an unemployed person with uncertain future prospects and neither a work history nor any assets. They don't have any assets or income, otherwise they would not borrow on these terms. They are unemployed and will not be employed for an undetermined period, possibly years. They are more likely than not to be too young to have any real work history.

Obviously they are different from the long term unemployed, disabled or veterans, but neither was I claiming that.

Re: Income-sharing agreements let students trade future earnings for investment

#40

Post by econ102fail »

ejlangev wrote: post #30

Fitting that in a world where all the same old labor fights that were settled in the past are happening again that someone would un-ironically invent a new form of indentured servitude. Makes me laugh at people who think that non STEM subjects have no value. Perhaps opening a book in one of those non STEM fields once in a while would help you avoid reinventing things consigned to the dust bin of history without reali…

Oh come on! Quit it with the hyperbole about indentured servitude. Agreeing to pay a lender a cut of your paycheck is in no form slavery.
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