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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

#51

Post by ceejayoz »

empath75 wrote: post #50
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…

Just make student loans dischargable in bankruptcy again, problem solved.

Well, one problem solved, but likely creating (or restoring) others. Their non-dischargable status helps keep rates low(er) and allow folks who'd never qualify for a $100k loan otherwise get a degree.

If we're gonna require a bachelors degree to work at McDonalds, it's probably time to treat undergraduate education like K-12; as an entirely publicly funded endeavour.

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

#52

Post by tantalor »

jacknews wrote: post #28
Talyen42 wrote: post #7

Equity-based student loan funding is way less predatory than debt-based student loans, in my opinion, but every comment I read screams "slavery" and "wage-slave". Of course, both types of funding can be benevolent and/or predatory depending on how you structure the terms, just like anything else. Unfortunately, our laws don't do a very good job of educating or warning young adults who are all entering predatory loan…

The answer of course is that society should fund education in the same way as it does roads, bridges, national parks, security, governance, and other social goods. With tax dollars.

All that stuff is funded with borrowing, not taxes.

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

#53

Post by rayiner »

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…

> The solution to that problem in my mind though is to regulate out of existence exploitative student loan conditions. Instead this mechanism creates a whole new way that lenders can rip students off. The Yale example is good but let me pick at this:

How is "regulation" the answer? Private student loans are effectively dead since Obama. Over 92% of student loan debt is owed to the federal government as the lender.

> There is a good reason why super high APR loans are heavily regulated - because they're almost certain to cause debt spirals and are only entered into by those who are desparate.

The crucial difference is that only borrowers who end up making a high income will pay that high APR. People who end up with lower incomes pay less. That's a perfectly reasonable arrangement.

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

#54

Post by gizmo686 »

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…

Who is reinventing indentured servitude? There is no obligation to work for any particular employer.

The public service student loan forgiveness (and simmilar private programs, although the latter seem uncommon). Is closer to indentured servitude, as you either have to work an eligable job for a particular employer (eg, the government) or face a significant financial cost.

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

#55

Post by [deleted] »

empath75 wrote: post #50
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…

Just make student loans dischargable in bankruptcy again, problem solved.

[deleted]

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

#56

Post by papermill »

It's insane that in the wealthiest country in the world, young people have to be indebted in order find a job. It's a modern day form of indentured servitude. It just shows how old the HN demographics are by the amount of overt support for this kind of program.

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

#57

Post by rayiner »

jacknews wrote: post #28
Talyen42 wrote: post #7

Equity-based student loan funding is way less predatory than debt-based student loans, in my opinion, but every comment I read screams "slavery" and "wage-slave". Of course, both types of funding can be benevolent and/or predatory depending on how you structure the terms, just like anything else. Unfortunately, our laws don't do a very good job of educating or warning young adults who are all entering predatory loan…

The answer of course is that society should fund education in the same way as it does roads, bridges, national parks, security, governance, and other social goods. With tax dollars.

Our roads and bridges are in shambles, while our universities are the best in the world.

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

#58

Post by fjp »

barry-cotter wrote: post #8
clarkevans wrote: post #5

I 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…

GP saying that it should be offered by the university because then if the university fails to produce a population of students that can make money in the job market, they will suffer.

It's an alignment of incentives much like how some people say colleges should be penalized or on the hook for having a high percentage of students that default on student loans. It would supposedly incentivize schools not to just charge students $300k for an education that gets does not prepare them for the job market.

Personally I think over-aligning these incentives and making college into a machine to make you a profitable worker sounds brutally dystopian, but something has to change about the current world.

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