SOM Student Develop Plans to Securitize Culture

On April 27, six teams of first-year SOM students traveled to New York to present their plans on how to securitize different cultural and educational aspects of life. Their ideas varied from creating a market to invest in the work of performing artists, to securitizing thoroughbred race horses, to two different concepts to help students pay for college. The plans grew out of the Integrated Leadership Perspective course and were judged by a panel of SOM alumni.

At the end of the day, the judges chose one of the groups focusing on finding ways to help students pay for college as the winner. The plan – by Juan Caicedo, Lisa Howie, Ganga Kannan, Won Hye Lee, Mike McLaughlin, Ivan Saldana, and Justin Tomljanovic – sprung from the reality that a freshman entering a private university now can expect to pay $200,000 and carry an average debt load of $20,000 upon graduating. The cost of tuition rises at twice the rate of inflation but available grant money can’t keep up.

The proposal looked to create a market where students can sell an equity stake in their future income against their current tuition. Students would be pooled according to university and graduation year, with shares of each pool traded in public markets. The idea, said Lisa Howie ’08, would be to ease the crunch many middle class families feel when it comes to paying for college.

“If you’re low-income, you’re probably eligible for grants and if you’re rich, you can just write a check,” she said. “But many middle class students have to make compromises, such as working while in school, that can really hurt their ability to do well. We found studies that show that people who work in school have lower grades and much higher drop-out rates.”

The team admitted there were some hurdles to the plan, chiefly the possibility that only students anticipating low incomes would be interested or that some would argue it creates a form of indentured servitude.

“We didn’t downplay potential issues,” said Howie. “I think it’s one of the reasons the judges liked us.”