New debt peonage: Income-share agreements

[Winehole23]

This is what disinvestment in higher education looks like.

Sign of our financialized, neofeudal world.

One day in 2017, Simien was riding the BART train when he saw an ad for the Holberton School, a for-profit technology training program. Holberton had plastered the stations with posters that said things like ivy league salaries and no up-front tuition and become a software engineer in 2 years or less. The ads featured flattering photos of people who looked like Simien’s friends from Ingleside: twentysomething African Americans, Asian Americans, and Latinos. They were all grinning.


Within days, Simien had submitted Holberton’s online application for a two-year course in software engineering, which required that he complete some basic computer-literacy exercises and write an essay about his interest in the school. The last step was signing an income-share agreement (ISA), which is how Holberton was able to accept students for its $85,000 program without requiring any payment up front. The ISA en led the school to a stake in Simien’s future earnings. Once he graduated and started making more than $40,000 a year, he would owe the school 17 percent of each paycheck until he paid back the tuition or until he hit the cap of forty-two months.


To Simien, it seemed straightforward: “I printed it out and read it,” he told me. “On the top, it says, ‘This is not a loan.’ ” But though he didn’t realize it at the time, Simien’s signature had transformed him into a financial product. Unlike a traditional loan, the ISA was directly tied to Simien’s performance in the labor market—the more money he made, the more money he owed. That stream of income could then be packaged, bundled, and sold to investors, launching Simien into the Rube Goldberg machine of American finance.

https://harpers.org/archive/2020/12/...t-debt-crisis/

[Winehole23]

The private-equity billionaire Robert Smith, who previously pledged to pay the student debt of graduates at Morehouse College, recently allocated $50 million to an ISA initiative for historically black colleges and universities. In 2016, Purdue University became the first four-year college to offer an ISA as a method of paying tuition. Purdue’s president, former Republican governor of Indiana Mitch Daniels, has been evangelizing ISAs to other schools across the country. “The best test of an innovation,” he wrote in a Washington Post op-ed, “is its acceptance and performance in the marketplace.”


If that is the case, the short record of ISAs is already worrisome. While traditional colleges and universities have been slow to adopt ISAs, their invention has led to an explosion of third-rate for-profit training programs for which traditional student loans are not available: marketing courses, pilot academies, software sales seminars, and tech boot camps like Holberton—fast-paced, lightly regulated schools that promise to launch students into careers in Silicon Valley. These programs often assure enrollees that, thanks to the structure of the ISA, they will be on the hook for the cost of their tuition only if they succeed in their chosen field. In many ways, that makes ISAs the perfect financial product for shoddy ins utions. “We only get paid if you get paid” is a strong sales pitch if you’re trying to convince debt-averse students not to ask questions and just sign on the dotted line. The problem, as Simien found out, is that the pitch isn’t always honest.

[Spurtacular]

Oh, look; oppressor enabler Blakehole is starting a random ass thread in which he pretends he's being oppressed.

[Winehole23]

peer instruction:

You go into their warehouse—you google ‘how to become a programmer,’ ” Michael Klein, a former Holberton student, told me. “You keep doing that for nine months. And boom: you owe them seventeen percent of your income.”

[Winehole23]

Oh, look; oppressor enabler Blakehole is starting a random ass thread in which he pretends he's being oppressed.

It's not about me dude, my college debt is long since paid off.

Might be relevant for someone seeking continuing education now.

Head on a swivel, you could get screwed.

[Winehole23]

unpayable debts often lead to other problems:

[Winehole23]

ISAs aren’t an intrinsically good or bad deal, Nelligan said. A well-designed ISA program would ensure that high-income graduates subsidize the cost of education for lower earners. Nelligan imagines a world where ISA investors get paid only when students actually succeed, a move that would shift the financial risk for educating students to banks, schools, and investors, and away from families. “Far, far too many Americans live on a knife’s edge while so many ins utions seem to enjoy remarkable insulation from the fates of their customers and citizens,” he told me. “ISAs can help.”


Today’s ISAs, however, aren’t designed that way—many are a worse deal than federal student loans. Last year, Mark Kantrowitz, who sits on the editorial board of the Journal of Student Financial Aid, conducted an analysis comparing ISAs—at a level of $30,000, paid back at 12 percent of income over ten years—with federal student loans. Assuming a student was making $50,000 a year, the average amount for someone with a bachelor’s degree, Kantrowitz calculated that an ISA would translate to a loan with an 18 percent interest rate. Current interest rates on federal student loans range from 2 to 6 percent. And student loans have added benefits: they can be paid back with income-based repayment schemes, or even forgiven altogether for those who choose to work in public-interest fields.

[boutons_deux]

Capitalists every hole in every American from cradle to grave, and American sheeple are indoctrinated to eat Capitalists' , NEVER speak badly of Capitalism, or the corrupt Capitalist MIC.

[Winehole23]

Capitalists every hole in every American from cradle to grave, and American sheeple are indoctrinated to eat Capitalists' , NEVER speak badly of Capitalism, or the corrupt Capitalist MIC.

*patented boutons Tourettes-style boilerplate*

[boutons_deux]

*patented boutons Tourettes-style boilerplate*

"“If you have just a little bit of something,

there’s always going to be someone ready to take it away from you."

[RandomGuy]

Oh, look; oppressor enabler Blakehole is starting a random ass thread in which he pretends he's being oppressed.

Biden President, not Trump. Cry harder.