Monday, August 31, 2015

Monday Musing: A Radical Proposal on Student Debt

Student debt is a huge issue in our field, especially for emerging museum professionals. So this article caught my attention last week: No more student loans? Purdue University proposes selling shares of students’ future income

Purdue is planning to invite private investors to fund the education of individual students, in return for a portion of the student's future income. Under this Income Share Agreement (ISA) a student's payments to the investor depends on whether they make more or less than they expected after graduation. 

There are a number of non-traditional student loan business models springing up, but many of these focus on refinancing existing federal and private loans, while others are forms of crowdfunding.  The potential side effects of an ISA system
are particularly interesting:

1) In effect, it invites crowdsourced input on a student's career plans. If no-one in a large pool of savvy, interested investors are prepared to bet on your career plans (and debt burden) maybe you should rethink the plan. 

2) It is an opportunity for students to pitch themselves specifically, not just their chosen careers, as "good investments." As this article notes, several companies are working on ISA models that let investors back "young people with brilliant ideas." Maybe this would help identify and fund, early, students with ideas and abilities that would enrich their chosen fields. On the other hand, to the extent that these businesses create an "old-boys" network version 2.0, they may simply reinforce socio-economic barriers to success.

3) It provides an opportunity for any sector (including museums) to literally invest in its future. Museum professionals could support students training to work in museums (whether through museum studies programs or other routes), while getting a modest return on their investments. And (to point #1) they might be in the best position to judge whether a given student, and that student's plan of study, is a "good bet." Museum associations could create investors circles that pool small amounts of money to create a create a critical mass of support.

So, what do you think: crazy idea or potential solution to crushing student debt? If you had it to do again (or are facing the decision now) would you pledge a portion of your future salary to an investor, in preference to a traditional loan?

Monday musings are my way of sharing "brain blorts": brief, off-the-cuff thoughts about something I have read recently, both to help clarify my thinking an in the hopes of generating discussion and response. I give myself 15 minutes or so to jot down a summary of the article(s) stuck in my brain, and outline why I think they may be important.




No comments: