Jump to content

College Grads Sell Stakes in Themselves to Wall Street


Beau Vine

Recommended Posts

I have seen stories of minor league baseball players doing this, so...

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

Click link to see the graphs/tables, including what you pay based on what your major is.

  Reveal hidden contents

 

Edited by Beau Vine
Link to comment
Share on other sites

So it's a loan with more favorable terms for students in majors that are likely to generate higher income?  Seems reasonable.  The "don't pay while you're unemployed" aspect is a nice hedge for the student, but I bet there's a ton of fine print on that one.

Link to comment
Share on other sites

  On 4/11/2019 at 12:10 PM, SquishMitten said:

So it’s basically a loan that you pay back based on your income. Gubment loans have a pretty similar option. Not all that revolutionary. 

Expand  

 

  On 4/11/2019 at 6:36 PM, jimmyjazz said:

So it's a loan with more favorable terms for students in majors that are likely to generate higher income?  Seems reasonable.  The "don't pay while you're unemployed" aspect is a nice hedge for the student, but I bet there's a ton of fine print on that one.

Expand  

I don't think it's a loan.  It's an equity stake.  The equity stake could be worth $0 in 10 years or potentially could be worth a few billion.  The investor invests cash in exchange for a percent of future earnings.  But there is no principal or interest or any of the characteristics of a traditional loan.  

Link to comment
Share on other sites

  On 4/11/2019 at 3:24 AM, Beau Vine said:

I have seen stories of minor league baseball players doing this, so...

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

Click link to see the graphs/tables, including what you pay based on what your major is.

  Reveal hidden contents

 

Expand  

Is this where my tips to the Barista go?

Link to comment
Share on other sites

  On 4/11/2019 at 8:27 PM, CDAK said:

 

I don't think it's a loan.  It's an equity stake.  The equity stake could be worth $0 in 10 years or potentially could be worth a few billion.  The investor invests cash in exchange for a percent of future earnings.  But there is no principal or interest or any of the characteristics of a traditional loan.  

Expand  

It's a hybrid.  Equities don't have a required payment like these do.  

Link to comment
Share on other sites

That's a fair assessment.  I'd term it a modified equity stake (as opposed to hybrid of an equity stake and a loan), in that instead of a percent of ownership, the investor receives a percent of future cash flow.  I suppose that could be considered a characteristic of a loan, however.

Link to comment
Share on other sites

Actually, I think the securitizing has already happened.  I remember reading about this at Purdue some years back and at that time, it was between the student and the U, only, no third parties, IIRC.

It looks like Purdue then laid off its "notes" into the capital markets.

So we are going to have subprime scholarships I guess.  Idiot bonds, as it were.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.



×
×
  • Create New...