Reading this…it got me in my feelings. There’s something fundamentally wrong to me with this.
College Grads Sell Stakes in Themselves to Wall Street
Instead of taking out loans, students can agree to hand over part of their future earnings in return for investment.
By Claire Boston
To pay for college, Amy Wroblewski sold a piece of her future. Every month, for eight-and-a-half years, she must turn over a set percentage of her salary to investors. Today, about a year after graduation, Wroblewski makes $50,000 a year as a higher education recruiter in Winchester, Va. So the cut comes to $279 a month, less than her car payment.
If the 23-year-old becomes a star in her field, she could pay twice as much. If she loses her job, she won’t have to pay anything, and investors will be out of luck until she finds work.
Wroblewski struck this unusual deal as an undergraduate at public Purdue University in West Lafayette, Ind. To fund part of the cost of her degree in strategy and organizational management, she sidestepped the common source of money, a student loan. Instead, she agreed to hand over part of her future earnings through a new kind of financial instrument called an income-sharing agreement, or ISA. In a sense, financiers are transforming student debtors into stock investments, with much of the same risk and, ideally, return.
In Wall Street terms, Wroblewski, a first-generation college student, is more small-company stock than Microsoft.
Those qualities impressed a company called Vemo Education, which vets students at Purdue and a handful of other schools on behalf of potential investors. More important, perhaps, Wroblewski believes in herself and her ability to make good on the contract. “Even with all my other loans, I knew I could make it work,” says Wroblewski.
Americans owe $1.5 trillion in higher education debt, a burden that weighs down their dreams and the U.S. economy. The Federal Reserve says millennials are now less likely to buy homes than young people were in 2005, and even senior citizens find themselves still making payments on their student loans.
We have $1.5 TRILLION in that debt. It really should be forgiven. 10 years of paying the loans, and they should be forgiven. President Obama created the public service program, but, right when the first group of people eligible to get the forgiveness, the demons in this Administration approved LESS THAN 1% OF THE QUALIFIED.
You read it – LESS THAN 1%.
Relieving our next generations of the burden of student loan debt would be such an engine for this country. Especially in the Black community, because, even though Black women are the highest educated group, that education comes with a lot of loans, because we don’t have parents with trust funds paying for the education. The money used to pay off the loans could be used to invest, to buy property, to fund small businesses. The student loans are draining that from our society. But, I don’t think people SELLING THEMSELVES is the way to resolve it.