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College Grads Sell Stakes in Themselves to Wall Street

Home Student Loan Management College Grads Sell Stakes in Themselves to Wall Street

  • Avatar notadoc 
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    ‘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.”

    https://www.bloomberg.com/news/articles/2019-04-09/college-grads-sell-stakes-in-themselves-to-wall-street

    #205441 Reply
    Avatar Tim 
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    This approach was bandied about for universities to provide financial aid this way.

    So far, not one university thinks it’s worth the risk. The value of the education isn’t worth the risk!

    #205446 Reply
    The White Coat Investor The White Coat Investor 
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    Status: Physician
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    Joined: 05/13/2011

    Wrote an article on this. It’ll run in a few months.

    There are several universities that are doing this including my local state U.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #205469 Reply
    Liked by Tim
    Avatar Hober Mallow 
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    There was a Planet Money podcast on this recently.  It talks about another Purdue student that used this method in place of loans.

    https://www.npr.org/sections/money/2019/03/29/708152566/episode-903-a-new-way-to-pay-for-college

    #205470 Reply
    Avatar Panscan 
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    I enjoy how they break the rates and duration down by major. That is how loans should be and hence why they should be private. The loan rate to be a doctor or engineer should not be the same as a liberal arts major.

    The risk for the bank is extremely correlated with the major. I have no idea why the rates should be the same.

    Avatar Panscan 
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    I wonder if there are working stipulations like they must work full time or etc? Is it taxable income or gross? Seems like this would incentivize working part time and maxing retirement contributions if its taxable income.

    #205472 Reply
    Avatar jhwkr542 
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    Joined: 02/15/2016

    I haven’t quite figured it out, but I do not like this plan.  Perhaps it’s an incentive to keep salaries low or that it shackles people for 10-12 years.  Of course I don’t really like the current system either.  This is akin to politics fighting over how people should be able to pay for healthcare when the biggest problem is the price of healthcare itself.

    #205474 Reply
    Avatar Peds 
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    Status: Physician
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    There was a Planet Money podcast on this recently.  It talks about another Purdue student that used this method in place of loans.

    https://www.npr.org/sections/money/2019/03/29/708152566/episode-903-a-new-way-to-pay-for-college

    Click to expand…

    yes planet money!

    #205480 Reply
    White.Beard.Doc White.Beard.Doc 
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    What happens when the student drops out and goes to work in a fast food restaurant?

    “The 6-year graduation rate was 59 percent at public institutions, 66 percent at private nonprofit institutions, and 26 percent at private for-profit institutions.”

    https://nces.ed.gov/fastfacts/display.asp?id=40

    #205610 Reply
    Avatar Tim 
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    I look forward to the first collection efforts. Is this going to be considered “private debt” that could be disputed?
    Looking at just one physician contract, compensation to be used is debatable. Stock options?

    Currently recruiting tool for internships in highly competitive fields.

    #205614 Reply
    Avatar Tim 
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    @White.Beard.Doc,
    Fast food is my job.

    My side gig is a profitable hobby (cough, cough).
    I buy and sell companies. (cough , cough)
    Naw, it’s a commission “draw” not earnings”, an advance.
    Carried interest. You know the deal.

    #205617 Reply
    Liked by Lordosis
    ENT Doc ENT Doc 
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    Joined: 01/14/2017

    These income sharing agreements are being done on a limited basis, Purdue being the most noteworthy. However, their program is very limited to people taking on additional private loans.

    Having Wall Street be the one assuming risk isn’t the right answer unless you disengage the federal government from guaranteeing loan payment otherwise. Maintaining the third party guaranteed payer situation does nothing to address the main problem – elevating price – because it’s the cause of the problem.

    The ideal solution would be for, as in medicine, for those providing the services (education, medicine) to assume the risk and for the users to take it or leave it in terms of the premiums or tuition. This actually inspires competition on value, which in any normal circumstance should drive down price to help the consumer.

    #205632 Reply

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