Why I am Disrupting the US Student Loan “Crisis”
By: Justin Jung, CEO of Alchemy Coin
September 24, 2018
While I was an international student from Korea studying at Penn St. University I noticed what I thought was an unusual trend: all my American friends wanted to borrow money from me. I helped out where I could. I thought it was a strange coincidence that everyone I knew was broke.
But then a funny thing happened: I met some more international students — and guess what? All their American friends were hitting them up for cash, too. As foreigners, we all got a big chuckle out of this — here in the richest nation on earth parents send their kids off to college without any money. To us foreigners, it didn’t make any sense at all.
School is now behind me now and with that comes maturity — and a recognition that the student loan crisis in America is no laughing matter. Many of my former American classmates are mired in debt they may never be able to pay back, stuck in dead-end jobs trying to make ends meet, and living in their parents’ basement as the American dream of buying a home and starting a family seems as much of a fairy tale as “Friends” with Jennifer Aniston.
But don’t listen to me. Consider what experts are saying about the U.S. student loan “crisis” — their words; not mine. Below is a chart from Goldman Sachs demonstrating the soaring costs of higher education in this country. My question is: who is going to pay for all this? Surely not international exchange students.
Twenty years ago, these costs seem negligible by comparison; today the aggregate cost of college education in the United States is nearly a trillion dollars.
Total outstanding federal student loan debt: $1.5 trillion
Total federal student loan borrowers: 44.5 million
Total outstanding private student loan debt: $64.2 billion
Percentage of total outstanding student loan debt that is private debt: 7.65%
To wit, politicians have noted the problem — but solutions remain scarce. Here are a some of my favorite quotes on this subject:
“If Wall Street can borrow money at 0.75% interest, so can college students. We need to stop treating students as profit centers.” — Elizabeth Warren, Senator from Massachusetts
“By making college unaffordable and student loans unbearable, we risk deterring our best and brightest from pursuing higher education and securing a good paying job.” — Mark Pocan, Congressman from Wisconsin
“Student debt is a product that has been sold to us with such repetition and intensity that most people believe they can’t live without.” — Unknown
According to USA Today: “Thousands of Americans in dire financial straits are being chained for life to debt they cannot afford. Something needs to be done to bring a measure of fairness back to this process. Until 1990, student loans could be discharged in bankruptcy court after the fifth year of repayment. Since then, Congress has repeatedly made erasing education debt more difficult. Debtors must prove that paying the loans poses an “undue hardship” — a term Congress has never defined and which many courts interpret in the narrowest possible terms.”
At Alchemy Coin, we believe enough is enough. We are setting out to disrupt the student loan crisis — and to be clear, we aim to help students; we want to “disrupt” the banks, who are incentivized only to benefit shareholders. And let’s face it: bank shareholders don’t give a darn about college kids’ education — all they care about is making money.
Let’s change that. Let’s make education affordable for all. Let’s make student loans affordable and let the market determine the interest rate — not the greedy banks.
Alchemy Coin is a peer-to-peer lender that brings borrowers and lenders together without intermediaries. We are using social media as a dynamic new way to assess credit scores. Since most 18-year-olds don’t own any assets, they are penalized by the outdated credit system that is entrenched in US banking laws. We believe blockchain technology will allow us to develop a credit-scoring system for you to opt-into based on your social media interaction — who you’re connected with, where they work, what they do, what you do and the interests you follow — will give us meaningful insights into your credit worthiness and allow creditors on our platform to make determinations as to how much they will lend and to whom.
It may sound complicated but it isn’t. Our plan to is to rollout lending options at up to a dozen universities in 2019 and we want to put our money where our mouth is: we intend to offer more attractive loans, with cheaper interest rates and more flexible terms than the current market will bear.
Hopefully, the big banks will compete with us — it will be great if they do, because this will allow rationality to set in — and it will open the doors on higher education to millions at an affordable price tag. And this will allow American college kids to pursue their American dream — and maybe even have a few bucks left over for pizza and beer money to pay back their friends.
