For those asking how this is different from a loan, the important difference is that you don't get money just for saying you want to take money from your future self, you get money for achieving metrics that you and the lenders have decided will get you to a pre-selected goal. That goal can be as much about what the lenders want, as what you want (hopefully there will be an intersection between the two sets). And you don't get the money based on creditworthiness, but rather the expected gain in future earnings/benefit that getting the loan (and reaching the goals) will achieve. And the schedule of achievements (and payments) will almost certainly be determined (or at least approved) by the lender ... although I guess a potential borrower could solicit the site/a lender to come up with a schedule for a certain goal and/or pre-determined schedules could taken by the lowest bidder in an open market.
I am willing to put some time into this idea (mostly from the www design and hosting end ... the thought of starting another business makes me very sleepy) ... see my previous post on how far I'd go with an idea.
I think the way to start this would be to ask the people who are ponying up the money what they want to achieve and what they're willing to lend to see that happen, what they think the ROI of borrowers getting that money for that purpose would be, what they think are the specific steps/incentives the borrowers need to reach that goal ... and just put money on the table. If there's money out there, someone will pick it up.
Good questions. r.e. about high schooler and contracts: the parents can co-sign, even if the repayment terms can exceed the parents' life expectancy, or the intent is to sign a new contract at majority age. r.e. downside of long-term incentives: breaking big goals into small, achievable steps is a known-good motivator; this also opens the possibility that instead of e.g. taking a minimum-wage job on the side, cutting into study time (keeping in mind that school is just one possible goal-set), the already-motivated won't have tough life circumstances keeping them from their goals; the rewards don't have to be monetary, I supposed, e.g. Harvard tells already motivated HS students that if they reach all these goals, they get a spot at Harvard (although that's moving away from the core mission).
I think a lot of people choose careers based on potential earnings, so "smudging" the step function out of their income curve isn't going to modify their total reward-incentive significantly (in fact, giving them future earnings at a time when money is more valuable to them increases the total reward, increasing the motivation ... and very-long-term goals can seem too remote to see the payoff).
Those engineers you want to lend to don't have to starve in college ... I would gladly devote a chunk of my current earnings to have made my college life more comfortable (although I suspect that struggling is long-term beneficial). & they won't borrow from themselves if they can already self-motivate ... but the ones who need a push (or have circumstances that might prevent them from completing college, or attending the most useful school for their goals) could still benefit from this. More likely, someone will say "hey, we need engineers, but they're all getting math degrees and heading to Wall Street" and use this as a carrot to shift the degree distribution ... payments might come for getting into a "technically-oriented" college, finishing certain courses, getting the degree, taking a job in engineering, staying there for 5 years, etc.
Admittedly, this is more a cocktail-napkin sketch of an idea than a business plan, and I expect like most startups its mission would evolve, but I think a variant of this has wide applications (e.g. the feds tell rust-belt businesses they can have cheap money to convert to a business that will still exist in 20 years .. really, anything with long-term ROI that needs money now in order to happen at all is a candidate ... think of it, metaphorically, as lifting an object out of a potential energy well).
I'm looking for, but can't find that post ... is there an expand-all function to the threaded discussions? I thought I read all the initial ideas (but not all responses) before posting. In any case, "not really" is my presumed answer, since I think the distinguish features from a generic student loan would be:
It's more look-n-feel than a business model, but this business would be client-focused, rather than lender-focused. The biggest practical outcome of that differentiator would be that the loans would not be priced to account for risk (plus the inevitable delta for being unable to accurately predict risk).
I can see this expanding into news-like arenas, e.g.:
Friend of a friend had their dog pulled out of their car and tossed into traffic (you may remember the story). So friend starts a site to gather info on the suspect, and eventually they have enough of a profile and info that they handed the bolus to a private detective who busted the guy. (I have another friend with a stolen -- not lost -- pet, who would like to accrete info on the thief).
Or, a person was shot and killed in my neighborhood, and since people don't talk much 'round here, that crime will never be solved. But some people know his friends, some his enemies, some his work history, etc., and if you put enough of that info together, at a minimum when people google the victim, they'll end up on this site, where they might be able to add a datum or two. Eventually, maybe a clue forms.
Basically crowd-source crimestoppers/solutions to individual problems (rather than answering a generic question whose answer can be reused ... that market is cluttered).
Second, my concept ... essentially, borrowing money from your future self for something with a postive ROI expectation value.
Economists can (OK, do) roughly value certain life milestones, such as the increase in lifetime earnings for finishing high school (for the sake of this discussion, let's use $500K for that number). They also believe that certain goals (e.g. passing grades for a semester) can be cash-incentivized. So you let an individual borrow a portion of their future benefit (10%? $50K buys a lot of incentive from a HS student) in the present, with a promise to repay that over a very long time period at a very low interest rate (something that works out to about 20% in total repayments, before factoring inflation, if I had to peg it to something for the sake of argument). A website would have a schedule of incentive schemes, possibly scaled by degree-of-difficulty (passing grades being tougher for weaker students, e.g.), and upon meeting the short-term milestones of that goal, and the final goal itself, incentives would be paid out. This could apply to any process that has a {present value of all future returns} greater than the amount needed to repay: reduced medical costs for weight reduction and smoking-cessation, job certifications (passing a CPA or actuarial exam), time off from work to acquire a work-related skill, cost of improving a home/installing energy-reducing features, etc. Yeah, some of those may not work, but I'm sure there's no shortage of quantifiable processes or goals with a positive future ROI. & I can see that measurement could be tricky, but in the school example we could have schools sign on to the program, in the certification example we get a copy of the certification from the certifying body, etc.
There's an additional monetary multiplier, in that the younger version (the borrower) is almost certainly in a lower income bracket than the older version (the lender), and the money is valued more highly ... I'd happily give $20 inflation-adjusted dollars (a pittance now) to my younger self just to go have fun with (who felt $20 was a lot of money), even taking into account that I wish I'd worked/studied harder when I was younger so I could coast more now. And when it comes time to repay the loan, the fact that I am effectively repaying myself might reduce deadbeatedness.
Of course, not everyone will repay their loans, and the payoff in this venture would be very long-term. So who would provide the seed money for this until repayments match outlays? Well:
Please proceed to poke holes/refine. thnx. -b.
First, a meta-discussion ... I think when a lot of people hear the word "startup" they think two things: long hours in an under-funded environment, and the hope of a short-term payoff (or at least an exit strategy). This may be incompatible with the idea of pulling a bunch of hours away from a bunch of bright people already involved in other things. It may also be counter-productive to the goal of benefiting people: one of the shortcomings of established corporations is the focus on near-term gains, even at the cost of long-term viability or benefits -- that mindset is exponentially worse in a time-accelerated enviro with a burn-rate that implies a near-future mortality for the corporate corpus.
Personally, if someone told me I had to do just 2 more years of what I went through with a startup in order to never work again, I'd say "no thanks". And while I'm happy to pitch in some time on concepts that either help humanity or personally enrich me (and am extra-eager if we can tie the two together), I'm not leaving my 30-hour-a-week, slippers-&-bathrobe-dress-code, commute-to-the-livingroom business any time soon (although I would if I got involved in something hugely beneficial and moderately profitable). So, I think some of the ideas already mentioned about marrying interests and abilities with different classes of start-ups need implementation if this is going to move from some sort of communal stew to a concrete business with distinct individuals making discrete contributions. [Aside: I think that's a start-up possibility right there ... a mechanism that allows arbitrary-sized contributions to a project (think open-source), but has some (community) basis for valuing those contributions, so when the cash starts rolling in, people can be compensated roughly in proportion to their contributions (yes, this is probably a harder problem than most of the startups suggested here). Thought exercise: if someone gave $1B "to Linux" (sic) for contributions to humanity, how would that money be doled out to contributors?]
Ideas with long payoff time frames are generally not good candidates for startups (unless the founders are willing to light their money on fire just because it's something they just want to see done), which limits the scope of things that can be done in a "non-philanthropic" enviro. I think you also need to delineate classes of businesses: some people will see the philanthropy angle as a mere selling tool to generate funding/interest; other people are interested in "doing good", and have ideas for companies that won't work any better as non-profits than for-profits.
So, for me: I'd like to contribute SOME time to a project with public benefit, and if I happen to get some money out of it down the road, I can decide to commit more time and/or consider that gravy. I've had a web design/hosting business (mostly LAMP) for about 15 years, and do a little bit of most things tangentially associated with that.
I do like the idea of creating a decision market to value those metrics (although the inherent bias of e.g. a rich Stanford alum believing a Stanford degree is worth an extra $10M and wanting to lend "too much" money on that basis only helps the business get seeded).
Unlike a Human Capital Contract, we're presupposing the lender knows the value of the goal, and unlike a loan, the triggers aren't to protect an interest ((re)payment milestones) so much as mold a desirable outcome (achievement milestones), and again, while student loans are the obvious application (and easiest to visualize), this is supposed to apply to any process where future earnings or returns are increased by more than the present value of the loan, and where the goal is less likely to be achieved in the absence of money.
Student loans are already prevalent (even if the terms of the loans are so poor that the purpose of the loan can't be met due to sacrifices needed to repay the loan); while those loans could be preconditioned ("I'll only give you this money if you work towards a degree that promises to repay it, even if you never in fact graduate"), I still think that's a far different story than "here's how much money you can borrow after achieving these steps on the way to this desirable goal (or spectrum of goals)" ... where no money is paid even if e.g. the student gets a "C" in a course they needed to get a "B" in, and only learns most of the material in a course the funder felt was worthwhile, and as a result the student has still gained some skills in logic, math, science, whatever the agenda is that's being pushed.
Optics: 'Real Genius' humor? har. But as important as it is to deconstruct a business model into functional parts, a big part of it is messaging and perception ... and while the process of borrowing from your future self (via a pool of money provided by investors) may be functionally indistinguishable from taking out a loan in many respects, I think the appeal of the two concepts are very different. It is actual human beings we're lending money to here (many of whom, by definition, are undereducated), so perception is more-or-less the reality. The fact that the primary debate still seems to be "how is this different than just lending cash?" tells me that I have a "Tivo problem" ... even if it's a great idea, if it can't be clearly communicated in a sentence or two then it's a non-starter. So, late-night infomercial tagline might be: "Do you feel like you are the only person in the world who would lend you the money you need right now to achieve your goals tomorrow?" If that's not both clear and compelling, then this is a bad idea.