Financing the Ed-tech revolution

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I met two companies this week who are working on solutions in a space that I had only considered in passing until I spoke to them. Per U.S. household, there is currently more student loan debt than credit card debt. We’re talking, ballpark, one trillion dollars. And that number doesn’t seem to be going down any time soon. The cost of college has risen 1,000% since they started keeping a record of the figure in 1978. For some context, since 1978 the cost of food and healthcare have risen 200% and 600% respectively. Education costs are blowing up. Recession-driven state budget cuts are sending public education costs through the roof. For-profit universities are greedy bastards, and private universities have always been expensive.

And it’s not like the market is not trying to solve this problem. In the United States alone, $100 billion of grants and scholarships were distributed last year from 20 million sources. And the government is trying its best to support the markets, and their efforts are (to my understanding) impotent. The Obama Administration approved a $40 billion increase in education spending to address this crisis. The landmark result of this legislation raises the limit of a Pell Grant by… wait for it… $400. By 2020, they expect another 820,000 students to receive the $6000 promised by the grant. It’s an earnest (and expensive) effort which I applaud, but it’s not gonna do much. One thing’s clear: this market needs technology.

Thanks to Learnsprout and Clever, there are now API’s across school information systems – which are the fragmented data management tools that all schools nationwide use – so innovators can build apps that use attendance, grades, and all other individual, school, and district data to improve outcomes in K12 education. These APIs should power innovation in higher-education financing as well. It should be easier for schools to discover scholarships and grants for their top performers, it should be easier for those performers to apply for the optimal number of scholarships (which is probably many more than the average student applies for), and grant-makers should take advantage of this unprecedented access to school data. Crowdfinance can grow the pool of capital accessible to our students by inviting the community to participate. Consumer web/mobile applications can simplify the process of tracking and repaying loans for students. The numbers in this market are absolutely massive. There’s money to be made, and a lot of good to be done. While we talk about MOOCs, other forms of vocational training, and re-education, we should consider innovating on college financing. Some folks are already doing what I’ve mentioned above. Let’s see more!

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