A Wild Idea

Here’s a flyer — a wild idea outside my competence but within my interest:

With all the talk about governments possibly taking equity stakes in companies as part of the unprecedented bailouts going on, how might we think about making the same or a similar move with student debt?

Whereas debt is extractive irrespective of outcomes — the mining company owes its creditors whether or not it strikes paydirt — equity is a way of sharing in an investee’s fortunes. Debt extracts more or less certain money from student borrowers (at around 6 percent, in an age of near-zero central bank rates) regardless of their educational or professional outcomes; equity — or some other form of financing — might reduce students’ cost of capital and force those who finance students to care about what happens to them after their studies.

There’s a lot more to be thought through here, but now seems as good a time as any to think about investing in young people’s futures rather than treating them as an extractive resource.