Is this a good idea?

dstebbins · #1 (**permalink**) 02-17-2010, 02:05 AM

There's a friend of mine who's very poor, with very bad credit.

There's a good chance that I won't be at the end of the month.

I have an idea on how I can help him pay for college (an estimated $90,000 for the entire bachelor's degree) while making a few extra dollars on the side.

Since he has bad credit, it will be very hard for him to get a student loan. Staffords may help, but they aren't a be-all, end-all.

So, instead, I'll offer him a contract where I pay for his college, and he pays me $600 a month, for 240 months, after college. Essentially, I'm becoming his student loan creditor, when no one else will!

Of course, what I don't tell him is that I will turn right around at sell the contract (which, for me, is an accounts receivable) for 80% of its total value.

The total value of the accounts receivable is $144,000.

This means that I will receive $115,200.

In the course of a single month, I've made a profit of $25,200, and my friend gets a college education, so he can pull himself out of this life of poverty, as well!

Is that a good idea? Would that work?

dstebbins · #2 (**permalink**) 02-17-2010, 09:48 PM

You've gotta be friggin' kidding me!

Twenty-eight views, and NO ONE can give me an answer?

sapphirecapital · #3 (**permalink**) 02-18-2010, 12:07 AM

easy, its a bad idea, first of all for the poor there are enough grants if you really want to go to college if you have the grades, if he does not have the grades send him to community college first, its cheap and its usually transferrable, try to find out why he has bad credit it may be fixable, I doubt you can work the loan and sale of the loan the way you say, there are a lot of legal problems and 80% is probably only paid by the people who launder.

Financial Saint · #4 (**permalink**) 02-23-2010, 01:11 PM

Sounds very complicated and risky for yourself. Sapphirecapital has a good point with the community college, its cheaper and he/or she can finish their associates and then move to university. I think your best bet would be to help him or her find a good job and then to do a credit rebuild program. And while they work and repair their credit, they can go to a community college and that way when the time comes for an university they will have better chances of getting loans,grants or financial aid.

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