Saturday, December 09, 2006

A Venture Capital Alternative to Student Loans

James Pethokoukis wrote a good article on student loans. I think this kind of approach would work very well in India. Only catch is that Indian legal system may be in favour of students even if they fail to pay the "future income". Although this article jokes about "indentured servitude", you can put out a contract to specify the duration for payment -- say, for full 5 years after graduation.

I see that this is a win-win situation. Students get the loans for studies, Financiers get the part of future income. This arrangment may turn into really crazy battle, if financiers behave like "kandhu-vatti" people. I am sure there are lot of poor students in India that would go for this kind of system if given a chance. I keep reading about poor students scoring excellent grades in +2, but couldn't afford college tuition.This is a microfinance version for education loans.

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