Stanford Business School? Really?
Street Smart
5/24/2012 8:59:00 AM
@Sherri, I really enjoyed this post, and as an avid follower of social media, philanthropy and microfinance trends, I found the idea of the double bottom line very interesting.
BUT...I started to get a little sceptical about the concept when you said that alumni involvement would make it more likely that students will pay back their loans. "Where's the proof of that?" I asked myself.
And then I read that the track record so far is with STANFORD BUSINESS SCHOOL! Speaking as an alumna of said institution, let me assure you that that is hardly a representative sample! Stanford Business School is very small--roughly a third the size of Harvard--and the ties between alumni, students and industry are particularly deep and lasting. Stanford MBA graduates command huge starting salaries, so debt repayment is far less onorous for them than for nearly everyone else in the graduating world.
Moreover, Stanford Business School students are more likely to have come from top undergraduate schools with needs-blind admission policies, so most likely arrive at the MBA program with little or no debt from their undergraduate years. And once enrolled, all or much of their tuition expense may be underwritten by former employers who are hoping to lure the students back two years later.
This idea bears watching but I'm unconvinced that the do-gooder assumptions will be scalable.
Re: Stanford Business School? Really?
ProfR
5/24/2012 9:25:39 AM
StreetSmart,
I agree that Stanford Business School is not representative. Also, students might be less likely to pay back the money if they think that wealthy alumni can afford to lose it.
If Alumni have money to invest in their school, I think they should pool the money and set up scholarships for students.
Wonder about Terms
tokyogai
5/24/2012 10:28:03 AM
Sherri- I wonder about the repayment terms. The government loans can not be escaped from by Bankruptcy- can these? Even with the nearly impossible to escaoe terms on federal loans, the default rate is still climbing. I wonder how these will do?
I love the concept from the pure standpoint of its innovation. It's time for change in college financing, and new ideas are a welcome change.
Re: Wonder about Terms
Dex
5/24/2012 11:07:29 AM
The innovative nature of this concept may be the best thing about it Noreen...Yep, you are right, time to think outside the box.
Re: Wonder about Terms
Sherri Cruz
5/24/2012 11:56:13 AM
@tokyogal: These student loans are like any student loans -- they can't be discharged in bankruptcy. But from what I gather, SoFi has flexible repayment plans available. SoFi tries to head off those sorts of problems by helping students land jobs or by giving them career assistance and by establishing loan programs at schools where the default rates are low.
The trick for students is to make sure that the education you get is worth the debt that you take on.
Re: Stanford Business School? Really?
Sherri Cruz
5/24/2012 12:01:01 PM
I didn't mention it in the post, but SoFi has a separate nonprofit for alumni to help students in need.
Re: Stanford Business School? Really?
Sherri Cruz
5/24/2012 12:04:07 PM
@streetsmart: The idea is that if you know the person you owe money to and have some sort of relationship with that person, you are more likely to pay back the loan.
Re: Stanford Business School? Really?
Street Smart
5/24/2012 12:27:18 PM
@Sherri, your explanation of the concept was crystal clear from your post. Maybe my point wasn't, which was that Stanford Business School isn't very representative of the "ties that bind" alumni to current students for many reasons:
1) Upscale nature of the market
2) Relative lack of debt going in
3) Ability to repay
4) Graduate school versus undergrad environment (where the real need probably lies)
4) Small, close-knit, "You'll never eat lunch in Silicon Valley again if you don't repay" alumni base.
All I'm saying is that on a spectrum from say, Stanford Business School to the University of Phoenix, Stanford's results might not translate to a broader sample. A well-known Eastern business school's either for that matter. I would expect the default rate to be a LOT higher in other populations.
Re: Wonder about Terms
tokyogai
5/24/2012 12:35:32 PM
That makes it seem much better for an investor. I hope this plan succeeds.
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