Indentured servitude is probably worse than current effed up system.
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An income share agreement is further from indentured servitude than debt is
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How so?
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If your income is below a set threshold, your payments pause. If your income remains below that threshold for a certain amount of time the agreement is voided. All forms of debt can be considered indentured servitude since you must work to pay said debt.
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Income shares are at least aligned incentivewise to the debtors, debtees HAVE to provide enough value to them to ensure they are paid
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I'm not aware of any other type of debt that has this type of value alignment
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For example, you only pay on Lambda School’s income share agreement if your income is $50k+. No interest. If you lose a job your payments stop instead of default. No job? Disappears in 5 yrs. Capped at a maximum you could possibly owe. Better than a loan in every way.
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Can an income share obligation rendered moot in bankruptcy court?
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This idea has been floated for a while. But what is the fundamental difference between loan & ISA? The former has interest the latter captures a portion of salary equated to cost.
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With our ISA for example if you don’t get a job that pays $50k/yr you don’t pay anything
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How is that not just debt with more steps?
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It creates an incentive structure where it's in a university's best interest to actually ensure that they increase a student's likelihood of getting a high paying job, rather than tossing them out into the wild after graduation with debt and underemployment
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If you don’t get a job that pays
$x you don’t pay on an income share agreement. And they go away after y years
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But even more so, if the cost of education stays the same or increases (ISA) merely become a less pernicious agreement.
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The entire focus of the institution shifts if they know they won’t get paid if students don’t get jobs
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Wait, the one who is on the hook is the financier, not the school, right? Tuition gets collected per semi right?
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regulation would be great news!
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