Published December 2012. Financial aid and student loan rules change often, so some details may be out of date. Ask us about your situation.
Crowdsourcing programs have long been a popular way for cash-strapped entrepreneurs to launch productive endeavors with the help of interested investors. A new form of crowdsourcing is taking shape this week as a New York startup aims to make the process work for recent college grads with ambition as large as their student loan debt.
Pave was launched on December 12 by three former employees of high-profile investment and multimedia companies, including Goldman Sachs and Facebook, aiming to get successful professionals to invest in the careers of individuals who are fresh out of school.
The program encourages not just financial support but also mentorship from investors who take on the cause of postgrads with interest in a specific field.
Modelled after more traditional crowdsourcing experiments, an agreement requires that once a sponsored individual begins to find success in a chosen field, that graduate will have to share a certain percentage of their income with their investor going forward.
The company announced in a December 10 press release that it will be starting with eight prospects and 22 backers who have agreed to contribute $5 million to the pilot.
Prospects are required to bring their college transcripts, including their GPA, to the program, as well as a portfolio that will help specific backers decide which individuals to invest in. Additionally Pave requires that prospects provide a credit history and all of the details regarding their college loan debt to the site so that backers can accurately determine the risk of investment.
The average amount of money most prospects are looking to raise from backers is between $20,000 and $30,000, according to Pave CEO and co-founder Sal Lahoud in a story from GigaOm.
For graduates looking for help paying student loans, an option like Pave may be an innovative way to receive not only necessary funds, but also helpful advice from good role models. College Financing Group has expert financial aid consultants who can help former students decide if this is a path that could work for them.