A Way to Pay for College, With Dividends

By David Bornstein

If you were a student looking for financing to pursue a degree in social science, would you accept an offer of $16,000, in exchange for paying 4.5 percent of your income for 10 years after you graduate?

In Tuesday’s column, I wrote about a social enterprise called Lumni, which helps predominately low-income students in Colombia, Mexico, Chile and the United States finance their college educations through “human capital contracts.” In exchange for the financing they receive, the students commit to repayment schemes along the lines of the one outlined above (the terms vary). After the time period elapses — it’s always 10 years or less — the obligation expires, no matter how much has been repaid. Some readers thought this could be an attractive alternative to student loans, but many others had strong negative reactions. I’d like to address their concerns.
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