Authors
Putilov A.
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Degree
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Dr. Sci. (Eng.), Professor, Dean of the Business Informatics and Integrated Systems Management Faculty, Research and Development Nuclear University “MEPHI” |
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E-mail
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avputilov@mephi.ru |
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Location
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Moscow, Russia |
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Articles
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Investment in human capital is a revolution of education fundingEnsuring a high level of education funding is an important priority for the development of innovative
economy. This article is about a new financial instrument, which is called Income Share Agreement
(ISA).
According to ISA the investor transferring funds to an individual in exchange for a fixed percentage
of his/her future income for a fixed period of time. ISA is an alternative to the traditional student
loan. Unlike the loan, students may pay more or less than the amount financed or even not to repay
at all. A payment would depend on their salary after education. ISA provides strong protection for
the students, because the part of risk transfers from the student to investors. The investor diversifies
his risk building investment ISA-portfolio. Moreover investors have strong incentives to support the
students via advising, mentoring and to help them to build career. He can lose a bit of funds in some
ISA-projects, but more often he will hit a jackpot. This article discusses some of the most significant
ISA-projects: MyRichUncle, Lumni, IBR Swap, 13th Avenue Funding and et al. These ISA-projects
have different types of financial models, but all of them are referred to Income Share Contracts.
We compare the current debt model and income-based alternatives, which has both advantages
and disadvantages.
Read more...
Performance Improvement of Economics University EducationThe article analyzes the possibility of using the model “Income Share Agreement” (ISA) as a source of additional funding for higher education institutions. Examples of the application of similar approaches in foreign practice are given. In the developed model, in addition to the main participants: the university, the investor and the student, for the first time an additional subject of the industry market is introduced – a recruitment agency. The substantiation and assessment of the significance of the participation of a recruitment agency in achieving maximum competitiveness in the educational activities of universities is given. The paper identifies the main areas of research on the experience of implementation of ISA in educational relations. It is emphasized that the priority areas of research on ISA relationship in education are devoted to the opportunism of the parties with asymmetry of information: the main concerns relate to the emergence of “adverse selection” and “moral hazard” effects in ISA relations. The paper deals with the main legal and ethical problems of the implementation of ISA in educational relations. The authors note that it is the transformation of ISA into a stock asset that requires additional legal regulation. The research problem is represented by the ethics of the assignment of rights under the ISA in favor of third parties (investors). If an educational organization can sell a student’s ISA to an investor, then it can receive income before the graduate gets a high-paying job. If an educational organization really adheres to the interests of the student, and guarantees the quality of the educational program, it should not withdraw from such financial obligations. If an educational organization sells its students ISA, it means to the stock market that it does not believe in their future income. Read more... |
