As we seniors celebrate the beginning of the end of our Vassar careers at The Chance Theater this Saturday night, most of us will probably not be thinking about how we will repay our student loans after graduation. If the loan counseling emails that have bombarded our inboxes are any indication, however, the government certainly wants us to start thinking about it. Student loan defaults have soared to the highest level in nearly 20 years as a flailing economy has prevented graduates from finding work that would allow them to pay back their student debt—a debt that, on average, was $29,400 per person for the graduating class of 2012 (CNN Money, “Average student loan debt: $29,400,” 12.04.13).
Students in the United States now collectively owe more than $1 trillion in student loan debt. Between 2004 and 2012, both the number of student borrowers and the amount borrowed shot up by more than 70 percent. College debt has become a crisis in this country, as neither taxpayers nor consumers can continue to afford it. There is no sign of the crisis letting up, either: College tuition costs continue to increase at two to three times the rate of inflation (depending on the institution), rising faster than family incomes, grants and scholarships (CNBC, “$1 trillion student loan debt widens US wealth gap,” 03.27.14).
More students than ever are unable to pay back their student loans, resulting in many loans defaulted and many credit scores ruined. A bad credit score can jeopardize one’s ability to take out loans in the future, buy a car, rent an apartment or house and even get a cell phone contract. It is then clear why it is imperative for students to find a way to start repaying their debt as soon as possible after graduation. In response to this, many organizations and initiatives have sprung up that aim to help students find solutions when their low-pay (or unpaid) internships or minimum wage jobs are barely enough to pay the rent, let alone to pay off their student debt.
Loan forgiveness programs are currently some of the most popular solutions, but more often than not, graduates are forced to simply take jobs they don’t want or that they are extremely overqualified for just to meet financial obligations. Graduates who may have otherwise wanted to wait to find a job in a field they are truly qualified in and passionate about are often forced to put their dreams on hold indefinitely. Their time is consumed instead working the first job they can find that can help them pay off their loans. For the typical idealistic Vassar student looking to follow their dreams and change the world straight out of college, a rude awakening might be in store once the harassment from debt collectors begins.
It is a vicious cycle that has all but trapped students with college debt graduating into a depressed economy. But what if there were a way out of this trap? What if talented, albeit financially constrained, graduates with big plans had someone who believed enough in their goals to invest in their success?
Enter Pave, an organization based in New York City dedicated to funding, mentoring and investing for millennials. The concept behind the organization is ingenious, really: why invest in a business venture or project that has the potential to completely and utterly fail—with no chance of being revived or repaid—when you can invest in virtually limitless human talent and potential instead? Essentially, Pave is a platform where experienced, successful individuals with an eye for such talent can invest in the futures of rising young professionals. Whether you are a filmmaker, entrepreneur, actor, musician or business owner, Pave allows individuals to pay off their debt and borrow from their future selves with the help of investors all over the world.
The way it works is simple: the organization is divided between Backers (investors) and Talent. Raising the money from backers and using this initial investment to launch their careers, Pave candidates then pay back a small percentage of their future income over five to 10 years—a percentage which is proportional to the amount they actually earn. The more you earn, the more you pay, but Pave ensures that the percentage paid to backers never exceeds 10 percent. This is designed to protect the talent and their assets if they one day hit it big.
Perhaps the most valuable part of becoming involved with Pave, however, is not the money at all. Rather, it is the guidance, connections and encouragement from the investors who genuinely want to see the young professionals succeed. It is in the backers’ interest to see the talent do well: they are advocates of the talent, endorsing them every step of the way. In an increasingly corporate, profit-driven world, it is refreshing to encounter an organization that is willing to bet on the individual in the present for future success. After all, confidence is important, and we must always be our own biggest allies. But it never hurts to have one more.
—Natasha Bertrand ’14 is a political science and philosophy double major.