'Constantly seek criticism. A well thought out critique of whatever you're doing is as valuable as gold and you should seek that from everyone you can but particularly you're friends. Usually your friends know what's wrong but they don't want to tell you because they don't want to hurt you. They say 'Oh I want to encourage my friend so I'm not going to tell him what I think is wrong with this product.' It doesn't mean you friends are right, but very often they are right. And you at least want to listen very carefully to what they say and to everyone. You're looking for, basically you should take the approach that you're wrong. That you the entrepreneur are wrong. Your goal is to be less wrong.' <a href="https://www.youtube.com/watch?v=0Bo-RA0sGLU" rel="nofollow">https://www.youtube.com/watch?v=0Bo-RA0sGLU</a>
This is difficult in the US to the point of being impossible (if it's not unenforceable from a legal standpoint to begin with). It can only work as debt, which is why similar companies have created P2P student-loan financing[1][2][3].<p>In the US, you can't issue shares for sole proprietorships (meaning you yourself are the business). Any entity whose ownership needs to be sold to multiple people will need to be a partnership or corporation.<p>Let's pretend there's a student named Bob. Your company must create a corporation for Bob and then sell shares in it to investors. There would also have to be a contract between Bob and the corporation saying that Bob will pay <i>x</i>% of his future salary to the corporation for <i>y</i> years.<p>Now let's say Bob doesn't want to continuing paying the investors. He can work as an independent contractor, which would make it nearly impossible to figure out how much he's earning. He can also just refuse to cooperate.<p>This would inevitably end up in court. A judge would decide if the original contract, where Bob agreed to pay the corporation <i>x</i>%, was enforceable. It's possible the judge wouldn't agree.<p>But let's say the judge agrees it's enforceable. All Bob has to do is declare bankruptcy, and any damages awarded by the judge go away. That leaves the corporation (and your investor clients) with huge legal bills, at least in the tens of thousands of dollars.<p>Even if that scenario only plays out 1% of the time, you still have to adjust your interest rates to compensate for the risk. At that point, your interest rates have now become higher than a regular student loan, which a reputable person can get for under 8%.<p>Furthermore, once people have graduated, they can refinance their student loans for much more reasonable deals, which means that even your stated 5% rate would be higher than what they could potentially get on the open market as a gainfully employed adult.<p>If you then consider the huge percentage of college students who fail to get a good job (or any job at all), plus the ones who die or become disabled, your investors just can't feel confident enough to accept a low interest rate like 5%.<p>In the US, Congress passed a law saying that student-loan debt is not forgivable. That means that even if a student goes bankrupt, s/he can't get out of paying back the student loans. That means that, even with a guarantee of payment and the goodwill of the federal government, a student loan is only worthwhile at more than 6%.<p>So basically I don't think this concept works from legal, financial, or economic standpoints. It also smells a bit too much like indentured servitude, which the public would frown on anyway.<p>1. <a href="https://commonbond.co" rel="nofollow">https://commonbond.co</a><p>2. <a href="https://www.sofi.com" rel="nofollow">https://www.sofi.com</a><p>3. <a href="https://www.lendingclub.com" rel="nofollow">https://www.lendingclub.com</a>