Reflect-ions | Students are drowning in debt, facing job uncertainty. This income share system aims to fix it.

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22 February 2022

Have excellent grades, get to a good university, get a job… and end up with massive debt. All of that struggle to face reality: the job you've studied for may no longer exist, and your salary might not even cover the interest rate of your loan. That's the reality check many students entering the ever-volatile job market encounter, questioning if it is all worth it. Perhaps the most intense conversation is ongoing in the US, where the total outstanding student-loan debt is a staggering $1.7 trillion, with Joe Biden facing the mounting pressure to cancel it. 

"The key thing is that the job market is changing massively. According to McKinsey, 21 million people will have to change jobs in the coming years and learn new skills in Europe alone. That requires a constant need for reskilling and upskilling," says Mariano Kostelec, Co-founder & CEO at StudentFinance. These facts are the backbone of the income share model his company pioneers, believing that unemployment demand, financing, and educational institutions need to be a part of the same equation. 

He talked about the future of education and its accessibility at Reflect Festival 2021 in an interview conducted by Christina Shailas, Technology Integrationist at The Heritage Private School in Limassol. 

Fixing the system

Kostelec suggests that education doesn't need to equal a daunting financial burden, as long as providers feel accountable for saturating employment demands. That's why he believes they need to face the economic consequences, which is what happens with StudentFinance. "What's interesting is that education providers have skin in the game and participate in that risk. If they don't provide the right path to employment, they don't get paid," he explains. Students don't pay anything until they get a job and reach a particular salary. 

The "skin in the game" approach can also switch things up in the job market, where employers struggle to embrace up-skilling. "Massive layoffs are happening everywhere. It's not that those companies aren't hiring. They're hiring aggressively - for different skills," Kostelec points out. But the problem is fear of people reaping the benefits and then fleeing to competitors. This is where income share agreements could work, too, with employees fairly paying off their education even if they quit. "Structuring economic incentives in a better way is needed," Kostelec says. 

Skills > education

Employers are becoming less interested in university diplomas and are looking at skills instead. With that comes the era of hands-on, project-based education, and that doesn't necessarily mean schools. 

According to Kostelec, big companies like Google are entering the space, and their prestige will correspond with how accepted their programs will be. And on top of that, traditional education providers partner with these companies to increase their relevance. 

Watch the interview with Mariano Kostelec to hear his thoughts on the future of education.

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Mariano is a young entrepreneur and global citizen, having lived in 10 countries so far. He has co-founded which become the largest mid-term rental platform in Europe, and, which is aiming to reduce the skills gap, by financing quality education programs with Income Share Agreements.

Before that, he worked for leading investments banks, including Goldman Sachs, Deutsche Bank, and UBS, and several fast-growing startups (most notably he led the international expansion of Groupon and Wimdu in Asia).

Mariano is also a member of the Entrepreneurs Organization (since June 2018), Sandbox network (since June 2010).

Mariano’s expertise is primarily in Fintech, income-share-agreements, student finance, student funding, student loans, digital skills gap, coding boot camps, education, startups, entrepreneurship, scaling teams, building startups, fundraising, venture capital, international expansion, Proptech, student housing, PBSA, accommodation, rental platforms.

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