April 21, 2014

HIGHER EDUCATION BUBBLE UPDATE: Chicago Startup Invests Directly in Students.

One idea for dealing with the student debt problem that has been kicking around for the past few years is “equity-based financing.” It’s a system in which people “invest” in college students, helping them pay for their tuition in return for a percentage of their future earnings. The idea sounds good on paper in other ways: markets funding certain degrees could end up being a powerful signal as to which programs are worth their sticker prices.

But the idea has remained largely untried. Until now. Enter Educational Equity, Inc., a Chicago startup that is dipping its toes in the water. As the company’s founder said in an interview with Forbes, he prefers to focus on a narrow range of degrees with steady returns and students who have demonstrated commitment in their previous endeavors.

It’ll be interesting to see how this pans out.