I love this idea, in theory. (Are you willing to start devoting time to the idea?)
The question is how to run a trial for this. Do you start with high schoolers? Or college students? (There are some real advantages there...) If it’s a couple of $500 loans, there are plenty of people who would fund them. The infrastructure would be harder. Perhaps in could be run through the college, or as part of a new type of college loan program. (Speaking of which, why are those loan rate so high? Could we do better—because 8% is not a good deal for a cash advance on future earnings!)
Practical questions:
1) Can a minor (High School age) sign a legally binding contract? Who would do so for them?
2) Are monetary incentives a good idea for long term incentification of learning? There are studies that show that when monetary incentives are used, they undermine other sources of motivation.
3) Would they misuse the money (I’d hate to incentivize a teen into buying a iPad so they can waste their time and ruin their academics afterwards...)
I would be thrilled to help with $500 pre-loan incentives for good grades in engineering classes: we need more engineers, and they make good money, even if they starve in college. But are those the students that need further motive to do well in school?
I am willing to put some time into this idea (mostly from the www design and hosting end … the thought of starting another business makes me very sleepy) … see my previous post on how far I’d go with an idea.
I think the way to start this would be to ask the people who are ponying up the money what they want to achieve and what they’re willing to lend to see that happen, what they think the ROI of borrowers getting that money for that purpose would be, what they think are the specific steps/incentives the borrowers need to reach that goal … and just put money on the table. If there’s money out there, someone will pick it up.
Good questions. r.e. about high schooler and contracts: the parents can co-sign, even if the repayment terms can exceed the parents’ life expectancy, or the intent is to sign a new contract at majority age. r.e. downside of long-term incentives: breaking big goals into small, achievable steps is a known-good motivator; this also opens the possibility that instead of e.g. taking a minimum-wage job on the side, cutting into study time (keeping in mind that school is just one possible goal-set), the already-motivated won’t have tough life circumstances keeping them from their goals; the rewards don’t have to be monetary, I supposed, e.g. Harvard tells already motivated HS students that if they reach all these goals, they get a spot at Harvard (although that’s moving away from the core mission).
I think a lot of people choose careers based on potential earnings, so “smudging” the step function out of their income curve isn’t going to modify their total reward-incentive significantly (in fact, giving them future earnings at a time when money is more valuable to them increases the total reward, increasing the motivation … and very-long-term goals can seem too remote to see the payoff).
Those engineers you want to lend to don’t have to starve in college … I would gladly devote a chunk of my current earnings to have made my college life more comfortable (although I suspect that struggling is long-term beneficial). & they won’t borrow from themselves if they can already self-motivate … but the ones who need a push (or have circumstances that might prevent them from completing college, or attending the most useful school for their goals) could still benefit from this. More likely, someone will say “hey, we need engineers, but they’re all getting math degrees and heading to Wall Street” and use this as a carrot to shift the degree distribution … payments might come for getting into a “technically-oriented” college, finishing certain courses, getting the degree, taking a job in engineering, staying there for 5 years, etc.
Admittedly, this is more a cocktail-napkin sketch of an idea than a business plan, and I expect like most startups its mission would evolve, but I think a variant of this has wide applications (e.g. the feds tell rust-belt businesses they can have cheap money to convert to a business that will still exist in 20 years .. really, anything with long-term ROI that needs money now in order to happen at all is a candidate … think of it, metaphorically, as lifting an object out of a potential energy well).
I love this idea, in theory. (Are you willing to start devoting time to the idea?)
The question is how to run a trial for this. Do you start with high schoolers? Or college students? (There are some real advantages there...) If it’s a couple of $500 loans, there are plenty of people who would fund them. The infrastructure would be harder. Perhaps in could be run through the college, or as part of a new type of college loan program. (Speaking of which, why are those loan rate so high? Could we do better—because 8% is not a good deal for a cash advance on future earnings!)
Practical questions: 1) Can a minor (High School age) sign a legally binding contract? Who would do so for them? 2) Are monetary incentives a good idea for long term incentification of learning? There are studies that show that when monetary incentives are used, they undermine other sources of motivation. 3) Would they misuse the money (I’d hate to incentivize a teen into buying a iPad so they can waste their time and ruin their academics afterwards...)
I would be thrilled to help with $500 pre-loan incentives for good grades in engineering classes: we need more engineers, and they make good money, even if they starve in college. But are those the students that need further motive to do well in school?
I am willing to put some time into this idea (mostly from the www design and hosting end … the thought of starting another business makes me very sleepy) … see my previous post on how far I’d go with an idea.
I think the way to start this would be to ask the people who are ponying up the money what they want to achieve and what they’re willing to lend to see that happen, what they think the ROI of borrowers getting that money for that purpose would be, what they think are the specific steps/incentives the borrowers need to reach that goal … and just put money on the table. If there’s money out there, someone will pick it up.
Good questions. r.e. about high schooler and contracts: the parents can co-sign, even if the repayment terms can exceed the parents’ life expectancy, or the intent is to sign a new contract at majority age. r.e. downside of long-term incentives: breaking big goals into small, achievable steps is a known-good motivator; this also opens the possibility that instead of e.g. taking a minimum-wage job on the side, cutting into study time (keeping in mind that school is just one possible goal-set), the already-motivated won’t have tough life circumstances keeping them from their goals; the rewards don’t have to be monetary, I supposed, e.g. Harvard tells already motivated HS students that if they reach all these goals, they get a spot at Harvard (although that’s moving away from the core mission).
I think a lot of people choose careers based on potential earnings, so “smudging” the step function out of their income curve isn’t going to modify their total reward-incentive significantly (in fact, giving them future earnings at a time when money is more valuable to them increases the total reward, increasing the motivation … and very-long-term goals can seem too remote to see the payoff).
Those engineers you want to lend to don’t have to starve in college … I would gladly devote a chunk of my current earnings to have made my college life more comfortable (although I suspect that struggling is long-term beneficial). & they won’t borrow from themselves if they can already self-motivate … but the ones who need a push (or have circumstances that might prevent them from completing college, or attending the most useful school for their goals) could still benefit from this. More likely, someone will say “hey, we need engineers, but they’re all getting math degrees and heading to Wall Street” and use this as a carrot to shift the degree distribution … payments might come for getting into a “technically-oriented” college, finishing certain courses, getting the degree, taking a job in engineering, staying there for 5 years, etc.
Admittedly, this is more a cocktail-napkin sketch of an idea than a business plan, and I expect like most startups its mission would evolve, but I think a variant of this has wide applications (e.g. the feds tell rust-belt businesses they can have cheap money to convert to a business that will still exist in 20 years .. really, anything with long-term ROI that needs money now in order to happen at all is a candidate … think of it, metaphorically, as lifting an object out of a potential energy well).