Sunday, August 09, 2009

Invest in a Student

One of many mental posts that never made it to print was my consideration of whether government low interest college loans were a good thing or not. Although I was a recipient, I'm weary of saying that subsidizing college attendance is the job of government. So, if I got my wish and dropped government student aid, how would I have paid for school (I do have six siblings and a taste for summer school)? What if a market for investing in college students was created? Imagine an investor reading profiles of students (GPA, clubs, jobs interests, etc) and deciding to give them $ in exchange for % of their future earning for a # years. This could be the great equalizer. A poor minority who shows promise could raise enough capital to go to school anywhere.

Then I heard about Monotizing Emma:
The year is 2013 and boutique investment bank Thackeray Walsh is arranging the first-ever securitization of smart teenagers.Nothing like the insanely convoluted securities that brought the global economy to its knees in 2008-2009, this bond is backed by something far more valuable than sub-prime mortgages or toxic assets.It’s backed by an A-list pool of adolescents pledging their future earnings. They get money now in return for a share of their subsequent income.
Should of copyrighted it when I had the chance. Well this just a play, surely this can't exist in real life. Think again:
Students and alumni connect through UniThrive’s online community. Alumni search for students they want to lend to. Alumni pledge as much or as little money as they are willing. At 0% interest, these loans represent the best offering in the student loan market. Students form lasting relationships with their alumni lenders. Alumni can put a face to their contribution. Students pay back the loans after graduation.
So it's a non-profit now, but there's no reason this same idea can't work with positive interest rates. But who would want to invest in students? How about me? Not just because I'm some delusional free marketeer, but because I'm a teacher. Who has better information on these investments than educators. Heck, this could even be a form of incentive pay for teachers:
What if teachers were paid based on the future income their students make. For example, student A grows up to make 100k a year. We look at the records and find the 20 teachers that taught student A and compensate them based on that. Compensation could be based on number of months spent with student.

1 comment:

  1. I like the first idea a lot. Not sure I'd want to pin teachers pay on the success of students though.


You are the reason why I do not write privately. I would love to hear your thoughts, whether you agree or not.