I’m looking for, but can’t find that post … is there an expand-all function to the threaded discussions? I thought I read all the initial ideas (but not all responses) before posting. In any case, “not really” is my presumed answer, since I think the distinguish features from a generic student loan would be:
there would be a specific schedule of milestones for a set list of goals (which could be set by individual lenders, if this was done Kiva-style). The goal is to get the otherwise-dropout to finish school, etc. This provides a societal benefit beyond the benefit to the borrower.
the perception that the borrower is borrowing from themselves, rather than “the man” (this may come down to how this is marketed, not a functional differences in the lending mechanism, but I think will help repayment rates, and minimize excessive borrowing)
low interest (not limiting the borrower’s options down the road, negating the purpose of the loan, as crushing student loans are doing to some folks)
a distinct philanthropic and/or societal-benefit aspect (seed money would likely have to come from people with philanthropic objectives, such as raising graduation rates, or long-term vision, such as raising the number of people with skills to solve a particular problem, or filling jobs in a future industry or industry facing a future shortfall of employees)
this is by no means limited to schooling … anything with an expected lifetime positive ROI is game for borrowing from your future self
It’s more look-n-feel than a business model, but this business would be client-focused, rather than lender-focused. The biggest practical outcome of that differentiator would be that the loans would not be priced to account for risk (plus the inevitable delta for being unable to accurately predict risk).
I do like the idea of creating a decision market to value those metrics (although the inherent bias of e.g. a rich Stanford alum believing a Stanford degree is worth an extra $10M and wanting to lend “too much” money on that basis only helps the business get seeded).
Unlike a Human Capital Contract, we’re presupposing the lender knows the value of the goal, and unlike a loan, the triggers aren’t to protect an interest ((re)payment milestones) so much as mold a desirable outcome (achievement milestones), and again, while student loans are the obvious application (and easiest to visualize), this is supposed to apply to any process where future earnings or returns are increased by more than the present value of the loan, and where the goal is less likely to be achieved in the absence of money.
Student loans are already prevalent (even if the terms of the loans are so poor that the purpose of the loan can’t be met due to sacrifices needed to repay the loan); while those loans could be preconditioned (“I’ll only give you this money if you work towards a degree that promises to repay it, even if you never in fact graduate”), I still think that’s a far different story than “here’s how much money you can borrow after achieving these steps on the way to this desirable goal (or spectrum of goals)” … where no money is paid even if e.g. the student gets a “C” in a course they needed to get a “B” in, and only learns most of the material in a course the funder felt was worthwhile, and as a result the student has still gained some skills in logic, math, science, whatever the agenda is that’s being pushed.
Optics: ‘Real Genius’ humor? har. But as important as it is to deconstruct a business model into functional parts, a big part of it is messaging and perception … and while the process of borrowing from your future self (via a pool of money provided by investors) may be functionally indistinguishable from taking out a loan in many respects, I think the appeal of the two concepts are very different. It is actual human beings we’re lending money to here (many of whom, by definition, are undereducated), so perception is more-or-less the reality. The fact that the primary debate still seems to be “how is this different than just lending cash?” tells me that I have a “Tivo problem” … even if it’s a great idea, if it can’t be clearly communicated in a sentence or two then it’s a non-starter. So, late-night infomercial tagline might be: “Do you feel like you are the only person in the world who would lend you the money you need right now to achieve your goals tomorrow?” If that’s not both clear and compelling, then this is a bad idea.
I’m looking for, but can’t find that post … is there an expand-all function to the threaded discussions? I thought I read all the initial ideas (but not all responses) before posting. In any case, “not really” is my presumed answer, since I think the distinguish features from a generic student loan would be:
there would be a specific schedule of milestones for a set list of goals (which could be set by individual lenders, if this was done Kiva-style). The goal is to get the otherwise-dropout to finish school, etc. This provides a societal benefit beyond the benefit to the borrower.
the perception that the borrower is borrowing from themselves, rather than “the man” (this may come down to how this is marketed, not a functional differences in the lending mechanism, but I think will help repayment rates, and minimize excessive borrowing)
low interest (not limiting the borrower’s options down the road, negating the purpose of the loan, as crushing student loans are doing to some folks)
a distinct philanthropic and/or societal-benefit aspect (seed money would likely have to come from people with philanthropic objectives, such as raising graduation rates, or long-term vision, such as raising the number of people with skills to solve a particular problem, or filling jobs in a future industry or industry facing a future shortfall of employees)
this is by no means limited to schooling … anything with an expected lifetime positive ROI is game for borrowing from your future self
It’s more look-n-feel than a business model, but this business would be client-focused, rather than lender-focused. The biggest practical outcome of that differentiator would be that the loans would not be priced to account for risk (plus the inevitable delta for being unable to accurately predict risk).
If you Google “student loans site:overcomingbias.com″, the first hit is the relevant http://www.overcomingbias.com/2011/10/its-called-stock.html with comments that point to other people’s versions; on the second page, http://www.overcomingbias.com/2007/10/college-choice.html is also relevant.
Loans can come with such triggers and due-dates. They are written in a Turing-complete language, after all.
I agree that the optics are the main problem.
I do like the idea of creating a decision market to value those metrics (although the inherent bias of e.g. a rich Stanford alum believing a Stanford degree is worth an extra $10M and wanting to lend “too much” money on that basis only helps the business get seeded).
Unlike a Human Capital Contract, we’re presupposing the lender knows the value of the goal, and unlike a loan, the triggers aren’t to protect an interest ((re)payment milestones) so much as mold a desirable outcome (achievement milestones), and again, while student loans are the obvious application (and easiest to visualize), this is supposed to apply to any process where future earnings or returns are increased by more than the present value of the loan, and where the goal is less likely to be achieved in the absence of money.
Student loans are already prevalent (even if the terms of the loans are so poor that the purpose of the loan can’t be met due to sacrifices needed to repay the loan); while those loans could be preconditioned (“I’ll only give you this money if you work towards a degree that promises to repay it, even if you never in fact graduate”), I still think that’s a far different story than “here’s how much money you can borrow after achieving these steps on the way to this desirable goal (or spectrum of goals)” … where no money is paid even if e.g. the student gets a “C” in a course they needed to get a “B” in, and only learns most of the material in a course the funder felt was worthwhile, and as a result the student has still gained some skills in logic, math, science, whatever the agenda is that’s being pushed.
Optics: ‘Real Genius’ humor? har. But as important as it is to deconstruct a business model into functional parts, a big part of it is messaging and perception … and while the process of borrowing from your future self (via a pool of money provided by investors) may be functionally indistinguishable from taking out a loan in many respects, I think the appeal of the two concepts are very different. It is actual human beings we’re lending money to here (many of whom, by definition, are undereducated), so perception is more-or-less the reality. The fact that the primary debate still seems to be “how is this different than just lending cash?” tells me that I have a “Tivo problem” … even if it’s a great idea, if it can’t be clearly communicated in a sentence or two then it’s a non-starter. So, late-night infomercial tagline might be: “Do you feel like you are the only person in the world who would lend you the money you need right now to achieve your goals tomorrow?” If that’s not both clear and compelling, then this is a bad idea.