Ideatrotter: Disruptive 2.0 Intelligence

A generation crippled by payback terms; where education is secondary and payback is primary. This thought sounds depressing, but is very real. Student debt has surpassed $1 trillion and the average lifetime to payback has changed dramatically.

Back in 1993, only 45% of students borrowed loans for school. Today, that number has reached 94%. The average debt hovers around $24,000, with 10% owing more than 54% and 3% owing more than $100,000. If you are not responsible for your own payments, then this maybe something to overlook. But, for all those responsible for their own debt, this hampers not only their entrepreneurial spirit to take on more risk, but it has left them bitter as the terms for the loans have spiraled out of control. 

Many anti-traditional revolutionists have called for the “higher education under microscope” treatment. Is all that debt really worth it? If tuition can rise by 8% YoY, but wages rise only 5% since 2001, there is a very real problem. Maybe these business models have become antiquated. Young speakers like Nikhil Goyal, at 16, have already expressed alternate methods to education, calling for a “learning movement”. Maybe, we can finally accept the dropout way of life; atleast then we can control all the terms. 

Please click on the title to see an interactive data graph about how education has changed and affected us over time. 

#students #education #debt #infographic

Rod Ebrahimi's startup venture, ReadyForZero, was recently accepted into Y Combinator’s incubator, for its value proposition on offering individuals a portal to manage debt. Rod Ebrahimi and his girlfriend were struggling to manage his girlfriend’s student debt. As he dug deeper into the issue, he realized that more individuals face the same financial dilemmas and web 2.0 could be a way to help people through their problems.

The total US consumer debt in 2011 was $11.4 trillion. The total student loan debt passed $1 trillion in 2011. With national unemployment still in the process of being fixed, debt management and debt escalation mitigation measures are key. Polaris Ventures recognized this when they decided to invest in ReadyForZero, leading a $4.5 million Series A round. Cognizant of its strong management team, solid market and active user engagement level, Polaris believes its investment will not only be able to generate solid revenues, but also deliver a public service. 

#venture capital #startups #entrepreneur #gamechanger #debt #USA #students #education

Can Innovation Nickel and Dime us into Debt?

Everyone is talking about innovation; revamping, line extensions, innovation hubs, incubation centers - these so called strategies are being used within companies as well as being viewed as opportunities for entrepreneurship. The excitement of innovation drives up sales because everyone wants to be the owner of the “It” product. But how much are you spending on innovation? The penchant for novelty has created a new generation of attention deficit consumers, constantly looking for the new upgrade/ product. The infographic attached provides a window into what buying into innovation actually costs the consumer. 

#innovation #debt #infographic #costs #sales #technology
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In this documentary, Wall Street Journal editors and reporters examine the origins of Europe’s debt crisis and why it spread with such ferocity to engulf much of the continent and threaten the entire world.

#video #documentary #Europe #debt #finance #economics
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Occupy Student Debt Wants You to Stop Paying Your Loans

Could a mass movement of college students and graduates challenge the student debt status quo? That’s the aim of Occupy Student Debt, a new movement inspired by Occupy Wall Street that wants to send a clear message about the crushing burden of the debt by convincing a million Americans to pledge to stop paying their student loans.

Occupy Student Debt supporters say today’s college graduates would “give anything to pay our debt,” but they are either unemployed or underemployed because of the recession. President Obama recently fast-tracked debt relief for students set to graduate next year, but his plan doesn’t help someone who’s been out of school for a few years. A lack of consumer protections—particularly for students who borrowed from private lenders—means some of those recent grads are seeing interest rates as high as 25 percent.

(Source: GOOD, via infoneer-pulse)

#students #education #change #government #debt #policy
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Let’s Eliminate Ratings Agencies


Standard & Poors downgrade of the US has generated much discussion, with some blasting S&P such as Robert Reich and some defending S&P such as Henry Blodget. Whatever you may think about the downgrade, I have a different proposal: let’s eliminate ratings agencies.  By that I mean specifically a government sanctioned oligopoly on rating debt.

Ratings agencies as they exist today are a distinct leftover from a pre-Internet era. They act as aggregators and evaluators of information which in the past was hard to gather and disseminate.  In an age when the information about future cash flows had to be carted around in large paper boxes or more recently via sneaker net, it made sense to have the government put in business some agencies that would receive this information, evaluate it and then condense it into an easily published rating.

With the Internet at hand this makes absolutely no sense.  We can simply require the issuers to publish enough information so that a large number of third parties can evaluate the underlying credit.  This is a radically different approach to regulation, which I have called “forced transparency.” All that government needs to do is (a) set forth what information must be disclosed and (b) require that it be disclosed in machine readable form (the latter is not to be interpreted as coming up with some kind of standard, simply saying that you can’t put your info out there as a bitmap scan of a handwritten document).

Let’s go back for a moment in time to the utter failure of ratings agencies in evaluating mortgage backed securities.  If anyone wanting to issue one of these had simply been required to put up CSV file with the zip code, $ amount of the mortgage, interest rate, value of home and amount of down payment for each underlying mortgage, I am 100% confident there would have been many more alarm bells going off and much sooner.

For various levels of government the data would be different.  For instance, municipalities might have to disclose 10 years worth of population, taxes received by category, expenditures broken down by category and 5-year plans for the same.  And so on.  You get the idea.

Who would do the rating in such a world?  No one in particular and everyone. There would be tons of analysis coming out including hobbyists, graduate students in business and economics, new independent ratings startups and so on.  How would bonds trade without ratings?  Just like equities which don’t have a single rating either but instead a large number of them and trade just fine.

If ever there was a great opening for sweeping reform of a set of institutions that has outlived their usefulness and can be replaced by the Internet, S&P’s action on Friday would seem to be the one.

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#Debt #Rating #Government #Politics #Business #economics
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