The student-financing industrial complex
What I call the “student-financing industrial complex” wasn’t created because it was a great idea.
It emerged because it was the only way to make college financially viable. Universities are so expensive that most families can’t afford it out of pocket, and most sane private lenders wouldn’t extend a “naked loan” to students to cover the cost. So, a patchwork of solutions has evolved into existence to answer the call.
it’s complicated, intimidating, expensive, and burdensome
529 plans. Subsidized Federal loans. Unsubsidized Federal loans. Federal grants. Work-study programs. And on and on.
Some paths are difficult to find. Others are hard to access. A few require parents as guarantors. Many are directly or indirectly backed by the Federal government. Most are expensive.
And in order to qualify for most of it, the college needs to be accredited.
That’s why most people are initially shocked when I tell them that pega6 will never be accredited.
“But how can students afford to go to pega6?”
they’ll be able to afford pega6 because pega6 is affordable
That means one of three things:
Parents who can afford to pay $100k+ out of pocket for college, can easily afford pega6’s one-time $15k tuition.
The family of the average college student pays almost $14k out of pocket EACH year. So, a one-time $15k tuition is no problem.
For those who don’t fall into buckets no. 1 or no. 2, they will need outside financing.
However, students won’t need to navigate the unwieldy maze of the student financing industrial complex.
Why not?
students will easily be able to source an affordable private loan for their pega6 education
Why? Well . . .
Lenders would only be lending $15k to a pega6 student (compared to tens or hundreds of thousands of dollars to college students).
Lenders know exactly what career the pega6 student will be pursuing because they know which accelerator the student will be attending (unlike with college students where lenders have no idea if the student is going to become an investment banker or a social worker).
Lenders also know that these will be high-demand, high-paying white-collar roles since these are the only career paths pega6 focuses on.
On top of all of this, pega6 grads will start repaying the loan after they graduate in one year (vs. four or five years for college grads).
From a credit standpoint, a pega6 student is crazy attractive. So pega6 doesn’t need accreditation to unlock financing. Students/families can easily self fund or easily secure private debt.
I predict we’re going to see a new category of lenders emerge around career accelerator students. Not because of government subsidies or parental guarantees, but because these loans are genuinely attractive products.
When education is affordable, outcomes are clear, and payback periods are short, you don’t need a student financing industrial complex to hold the whole thing together.
