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Well, the difference is that you are not obligated to pay the loan back if you don't earn any substantial amounts of money. And if you have to pay, the amount i

Well, the difference is that you are not obligated to pay the loan back if you don't earn any substantial amounts of money. And if you have to pay, the amount is adjusted to your salary, so you can be sure that you can afford paying back. I'm not defending this actual offer, I haven't really looked at the specific terms. But in general I find this quite a compelling model. My alma mater in Germany, which was a private university, offered a similar model. Instead of tution (~42'000) you could choose to pay back 10 years 9% of your salary (if it exceeds a certain threshold), capped to 2x of the tution. Basically, it is a bet on your employability. It only works out if your graduates succeed in searching and keeping a job. Additionally the model gives to the gradudate the freedom to choose a job without looking at the salary, because the payback is adjusted to your salary. I think offering this option at American colleges would rather help, and generally I think its not usurious, and quite different to a loan. But then again it depends on the specific terms.

everdev 8y ago
I just can't get passed the 300% return rate. I don't understand how charging that much is legal. I feel like it's somewhat predatory because only people who are struggling to make ends meet would accept such an offer. It's specifically designed and marketed towards people who can't save $10k. Nobody who can save $10k would take this offer IMO.
- smokeyj 8y ago
  > I just can't get passed the 300% At least you understand your mental limitations. But this is also a form of false charity, where you make decisions on behalf of others in order to signal virtue. This is a business model that should be supported - because those of us with basic economic literacy know that competition will reduce corporate profits to market rate. College is a misplaced job training program that is a self perpetuating status symbol. The poor NEED this model to be disrupted.
  - everdev 8y ago
    Yeah, not a fan of college either, but I'm also against marketing high repayment loans to the poor. Students already struggle with 5-7% student loans. Sure, this is less total money, but just bring the repayment down to something reasonable like $30k over 10 years to offer a rate that doesn't exceed maximum interest rate laws.
    - smokeyj 8y ago
      > Sure, this is less total money Oh, MONEY - who cares about that stuff. Not the poor, they got tons of it. I get the feeling you and your parents are well off. And I say that only because I've only met rich white people who are versed in Marxism.
      - everdev 8y ago
        > I've only met rich white people who are versed in Marxism Wow. I'm old enough to know that when someone tries to attack you personally, it's because of something deeper in their life and not about the subject matter anymore. Sounds like you're really upset that someone wouldn't agree with you on this topic. If you're open to staying on the subject matter, are you OK with any limit? A $50k payback? A $100k payback? A long time ago the US decided to put a maximum rate on loans. I guess I don't understand if you think maximum interest rates are Marxist or something else, because I'm only talking about the interest rate part of this equation.
        smokeyj 8y ago
        Sorry I did get annoyed. I've had similar ideas for this model and ultimately feel like it would be dismissed out of a sense of moral justice. Would I be okay with a 100K payback? In theory sure, thats the model for elite universities and no one seems to be concerned for their wellbeing. The determining metric would be ROI. The proposed model limits risk and incentivizes instructors to produce the most valuable curriculum. As more companies compete in the space, unskilled workers win because they now have a bridge to become skilled. Not only that, they're receiving cash while doing so! I want to see this model taken to the extreme. Offer luxury living to students while they learn, and offer work from home positions upon graduation. Have developers compete to create modern campuses that compete for unskilled labor. They would only do this knowing there's profits to be shared by developing the unskilled to the skilled.
- dragonwriter 8y ago
  > I just can't get passed the 300% return rate. I It's a 300% return rate only because you are assuming the repayment only covers the $2K/month stipend ($10K total), with $0 tuition equivalent. They are comparing the program to $15K tuition programs (and also saying it offers more). If you assume the payback is for the stipend plus $15K in tuition, it's a lot more reasonable. If you assume that they are offering 1/3 more than a $15K tuition program so that the tuition equivalent is $20K, it's effectively a zero interest loan at the maximum repayment amount.

everdev 8y ago

I just can't get passed the 300% return rate. I don't understand how charging that much is legal. I feel like it's somewhat predatory because only people who are struggling to make ends meet would accept such an offer. It's specifically designed and marketed towards people who can't save $10k. Nobody who can save $10k would take this offer IMO.

smokeyj 8y ago
> I just can't get passed the 300% At least you understand your mental limitations. But this is also a form of false charity, where you make decisions on behalf of others in order to signal virtue. This is a business model that should be supported - because those of us with basic economic literacy know that competition will reduce corporate profits to market rate. College is a misplaced job training program that is a self perpetuating status symbol. The poor NEED this model to be disrupted.
- everdev 8y ago
  Yeah, not a fan of college either, but I'm also against marketing high repayment loans to the poor. Students already struggle with 5-7% student loans. Sure, this is less total money, but just bring the repayment down to something reasonable like $30k over 10 years to offer a rate that doesn't exceed maximum interest rate laws.
  - smokeyj 8y ago
    > Sure, this is less total money Oh, MONEY - who cares about that stuff. Not the poor, they got tons of it. I get the feeling you and your parents are well off. And I say that only because I've only met rich white people who are versed in Marxism.
    - everdev 8y ago
      > I've only met rich white people who are versed in Marxism Wow. I'm old enough to know that when someone tries to attack you personally, it's because of something deeper in their life and not about the subject matter anymore. Sounds like you're really upset that someone wouldn't agree with you on this topic. If you're open to staying on the subject matter, are you OK with any limit? A $50k payback? A $100k payback? A long time ago the US decided to put a maximum rate on loans. I guess I don't understand if you think maximum interest rates are Marxist or something else, because I'm only talking about the interest rate part of this equation.
      - smokeyj 8y ago
        Sorry I did get annoyed. I've had similar ideas for this model and ultimately feel like it would be dismissed out of a sense of moral justice. Would I be okay with a 100K payback? In theory sure, thats the model for elite universities and no one seems to be concerned for their wellbeing. The determining metric would be ROI. The proposed model limits risk and incentivizes instructors to produce the most valuable curriculum. As more companies compete in the space, unskilled workers win because they now have a bridge to become skilled. Not only that, they're receiving cash while doing so! I want to see this model taken to the extreme. Offer luxury living to students while they learn, and offer work from home positions upon graduation. Have developers compete to create modern campuses that compete for unskilled labor. They would only do this knowing there's profits to be shared by developing the unskilled to the skilled.
dragonwriter 8y ago
> I just can't get passed the 300% return rate. I It's a 300% return rate only because you are assuming the repayment only covers the $2K/month stipend ($10K total), with $0 tuition equivalent. They are comparing the program to $15K tuition programs (and also saying it offers more). If you assume the payback is for the stipend plus $15K in tuition, it's a lot more reasonable. If you assume that they are offering 1/3 more than a $15K tuition program so that the tuition equivalent is $20K, it's effectively a zero interest loan at the maximum repayment amount.