4 Suprising and Outrageous Ways Private Companies Are Fueling the Student Debt Crisis

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http://www.alternet.org/education/crowdfunding-cant-solve-student-debt-crisis



“Investing in human capital makes sense as an asset,” says Reed Handley, head of Communications & Operations at Pave, one of several new companies that offer current college students and recent graduates income share agreements (ISAs). Income share agreements were first proposed by Milton Friedman, a man one as a general rule should not listen to, who suggested in his essay “The Role of Government in Education” that shareholders “'buy’ a share in an individual’s earning prospects; to advance him the funds needed to finance his training on condition that he agree to pay the lender a specified fraction of his future earnings.”

1. Invest In Your Ideology Today

At Pave, young people applying for or receiving backing are referred to as “Talent,” often with a with a capital “T.” One aspect that Pave likes to talk up is the personal touch afforded to Talent and backers alike. The backer, if they so choose, can act as mentors to their young investments, advising them, keeping up a regular correspondence, Daddy Warbucks-ing it up over Gchat.

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2. Nurturing the Next Generation of People Who Fund People

It is clear that many of Pave’s Talents are brilliant individuals driven by a strong social justice mission. Some are deeply passionate about sustainable farming, others make documentaries. But mostly this seems to be a case of like-attracts-like, of training a new generation in the art of producing surplus capital for individual gain. It’s not just that a few of the projects that get funded are lame corporate start-up ideas—it’s that a lot of them are.

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3. Diversity Is Not a Priority

One of the major problems with student loans is that the burden of repayment usually falls on the marginalized majority of students: people of color, LGBT people, people from low-income backgrounds and women.

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4. A Student Loan By Any Other Name

ISAs pitch themselves as an alternative to student loans, but companies like Pave have little incentive to dismantle a system that sends a steady flow of recent graduates to their websites. About half of Pave’s Talent uses the platform to refinance their student debt. “This alternative form of financing is unlikely to put even a tiny dent in the vast market for federal and private student loans,” wrote Tara Siegel Bernard of Pave for the New York Times in 2013.

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