I'm not questioning the motivation. I'm just pointing out the tax authority might have issues with it being tied to consumption of a specific for profit provider if you want the tax exempt status
With option 2 no capital is ever returned to investors or Lambda
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How so? The note has an interest rate. Principal and interest are returned. You take an origination fee at Lambda to cover default risk. Likely you can partner with private student lenders but at higher costs to the students.
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2 would be a donation to an endowment where you can’t take out the returns
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The idea of an endowment is generally to have money you invest (and generate returns from) to fund ongoing operations. You could invest it in a housing program but I think there are better/simpler ways to solve this problem.
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Yeah endowment isn’t the right word. Just mean fund you donate to and you don’t get paid back out of.
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Why is this superior to debt funding? The main cost driver is lack of a guarantor, but you already have skin in the game with these students. Is co-signing a much bigger risk than you are already taking?
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That’s why I asked 1 or 2. Some are more interested in returns, others in sustainability of the fund and lower rates for students
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I don't think the two are mutually exclusive. What makes it unsustainable is if your business model fails. Then the fund is moot.
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If it is me running this line, it is just a P&L built around bringing in financial partners. Your students need more than housing, they need a whole middle class financial life.
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