 Good morning. Jamie Marisotis, I'm president of the Lumina Foundation. And on behalf of our partners here at New America Foundation, we want to welcome you to this forum, this convening on zero education debt. This event is really a joint venture between New America and Lumina Foundation. And I want to begin by thanking our partners at New America Foundation, particularly Alex Holt, for working with us on organizing this. We sort of independently came to the idea that we really, really needed to have this kind of a conversation. And we recognized that doing this together was going to have a lot of power and value. And we're very proud of our partnership with New American Foundation on many different levels. And we're happy to do it in this case. From Lumina's perspective, I want to say that the reason why this conversation is so important is that we believe one of the biggest challenges facing our country right now is the growing demand for talent and our inability to meet that growing demand for talent. Lumina's tried to articulate that in a specific way by working to help the country achieve a goal of having 60% of Americans achieve a high quality post-secondary degree certificate or other credential by the year 2025. Now there are lots of things that are in the way of that goal, but we believe that goal is achievable with the right combination of factors and strategies that can be applied towards helping the country get there. One of those key impediments, however, is what we like to perhaps unfavorably call the dysfunction of the current system of student finance in higher education. That system in its plainest language is broken. There are many indicators of that broken system from the fact that we have very significant concerns among students and their families about the price of college. And the price or the perceived lack of affordability of higher education has several impacts. In some cases, it's literally inhibiting students from going to college at all. In some cases, it's influencing their choice of institution. And in many cases, it's impacting their post-collegiate experiences and choices, whether they be with a degree or without. And in both of those cases, the connection between the affordability or perceived lack of affordability and the growing concerns about debt have come together, I think, in a particular way that has turned the national conversation about affordability of higher education into one of the most important that we are facing today. So we've got to find new and different ways to help students pay for college. We've got to do so soon. And from Lumina Foundation's perspective, if we're serious about achieving our nation's attainment goals, we can't simply tinker at the margins. We've got to find ways to significantly change the paradigm and focus on new ways to literally deliver more higher education to more people better. That's the challenge that's in front of us, and that's what we've got to face. Today, what we're going to be talking about is some really innovative, out-of-the-box ideas that I think in some ways have been mischaracterized as new ways of thinking about loans. These really aren't loans. These are actually new paradigms, sometimes called human capital contracts, sometimes using other language to describe them, in which students can pay for their education in a different way rather than the fractured upfront payment system. Many of these systems focus, essentially, on the future income of the individual as a payment mechanism. At Lumina Foundation, and I know for our colleagues at New America Foundation, we're very interested in looking under the hood of these ideas, figuring out how they work, and trying to better understand whether or not these are viable alternatives that we take to scale to help us achieve a system level change in higher education. We know that there are many different things that have to be explored in thinking about these new models of student financing in higher education, but we want to make sure that, in each case, these models fundamentally come back to the most important participant in the system of higher education. It's not the institutions, it's the students. Students have to be the unit of analysis in the system of higher education going forward, because that's what society needs. That's what the demand for talent is all about, and better serving those students so that those students become graduates who can participate effectively in our economy, in our democracy, in our cultural well-being. That's ultimately what this is all about. So we want to try to figure out some key, the answers to some key questions about these new plans. And Alex is going to come up and tell you a little bit about what these plans are, and then introduce our first panel. We want to know if these new plans will actually encourage more students to enroll, and if, in fact, they will be adequately served all the way through to the achievement of their credential to graduation. We want to know whether or not the, if students on these deferred plans might actually end up paying more than they would pay under normal circumstances. Is this a case where we're essentially deferring the payment and creating a longer model for payment than we currently have? Whatever the result, we think that the future system of higher education needs to be highly transparent from the perspective of students. We want to make sure that this system serves, as I said, more students than the current system currently does, serves them better, and helps them to graduate, if not debt-free, at least with a different model of how they're financing their higher education, so that the choices that they make about whether to go to college, where to go to college, and what they do after graduation are not influenced unduly by the student financing model itself. So, we're excited to take part in this conversation. I'm very much looking forward to the dialogue and the ideas that are generated, and now it's my pleasure to introduce really the driving force behind the conversation here today, Alex Holt from New America Foundation. Alex? Thanks so much, Jamie. I just want to, again, thank the Lumina Foundation for their generous support and help, and especially Zacchia Smith, who I've worked with a lot to make this happen, and I want to thank everybody for coming here today. So, we've all heard the number, a trillion dollars, an outstanding student loan debt. It's a big number, but of course, an average borrower doesn't have a trillion dollars in student loan debt. That's not the number they're thinking about. They're thinking about that burdensome monthly payment that they have to pay, they often face it. It can be really burdensome in the sense that it can defer important purchases and savings. So, when we speak about, all right, when we speak about investing in education, that increasingly means borrowing against one's future earnings with a loan. Over the long term, for a lot of people, that's good investment. However, in the immediate term, right out of college, getting a job is hard, getting a high paying one is even harder, and those high monthly payments are inflexible. Furthermore, this is non-collateralized debt. With other forms of debt, if you get in trouble, you can sell the asset, the bank can take it from you. That is not the case in this situation. This makes loans a particularly bad financial vehicle for higher education financing for a lot of people because of the high variability of risk involved in future earnings. So, what is a more analogous example of investing in future income that already occurs in the market? How about a startup? In the case of a startup, the guy in a basement knows that he has a chance of becoming the next Facebook. He also might fail. So, he doesn't take out a loan. He gets an investor to give him cash in return for a share of future earnings. This balances the risk and rewards more equally between the borrower and the investor. And this investment, in terms of higher education, is what we're calling an income share agreement for today's presentation. An investor pays the upfront cost, the student agrees to pay back a set percentage of his income for a set number of years. If the student makes a lot of money, he pays back a lot. If he makes little to no money, he pays back nothing. It's helpful to put income share agreements in the context of other financial options. In a traditional federal student loan, a borrower has a balance and makes the standard monthly payments for 10 years until the principal plus interest is paid off. With an income contingent loan, we also call it income-based repayment, the borrower still has a balance with an interest rate, but his monthly payments are linked to his earnings. Payments terminate either when the principal plus interest has been paid off or a certain amount of time has passed at which time the remaining balance is forgiven. For an income share agreement, there is no balance. The investor pays for school upfront, and then the borrower simply agrees to a payment obligation for a set amount of years. So the spectrum I'm going to show you demonstrates the difference between a normal loan, an income contingent loan, and an income share agreement as measured by risk. As you can see under a normal loan, most of the risk is on the borrower due to the inflexible nature of the payments. In an income contingent loan, that flips. The reason is because if the borrower makes no money, he pays nothing, but if he makes a lot of money, he's only going to pay back the interest that he would have accrued on his loan. So you can compensate for this by making a really high interest rate, but that's kind of impractical due to certain market forces. The most balanced approach is an income share agreement. The investor and the borrower share the risk equally, and importantly, they also share the reward. The most important aspect of an income share agreement from the borrower's perspective is the payment rate. Though there are variations on the theme, the basic structure is that for a certain amount of money, a borrower will agree to pay back a share of income for a certain period of time. That means that there is no balance and no interest rate. So the question becomes, how is that rate set? This is a spectrum of the types of income share agreements as determined by the size of the pool. This is a general theoretical outline that I think might be helpful in terms of talking about this today. The purest form of an income share agreement values each individual based on certain characteristics and can even set different payment rates based on which school he plans on attending. Theoretically, under this model, a regional state college could cost more than a prestigious private college for a given student because the student's expected future income is so much higher at that private college. So the student would be focused on the value price as determined by the rate as opposed to the sticker price. So it has this great built-in price signaling mechanism. There are of course some potential downsides. There's potential for discrimination and since different people get different rates, there's an issue of access. Specifically low income students may be passed over because the risk is too high or if the rates are so high that they de facto get priced out of the system. There are also those who believe that ideal markets look a lot different than real markets and that the proposed system is potentially far too complex to actually work at scale. Next on the spectrum is pooled valuation. In this arrangement, the market creates a risk pool based either on credential, school, or a grouping of schools like a tier of schools. Here every student in a given risk pool would be subject to the same terms. The system is simpler than the individual market described before. It discriminates by school as opposed to by the individual and it still maintains that price signaling mechanism. The downside here is that anytime you create a pool, you run the risk of the best investments opting out for more favorable terms through a different financial product. If this were to occur, investors would adjust rates higher and then more people would opt out. This feedback loop would potentially eventually lead to the market collapsing. The bigger you make the pool, the more risk you run of this happening. At least at the undergraduate level, this particular fear seems a little overblown to me since students don't really know what their future income is going to be, they're not great at predicting it, and thus are probably willing to tolerate a risk premium in the form of a slightly higher rate. Last up is pooling by the entire population. This is probably, probably only something a government could undertake. Under this model, the state pays for a student's tuition up front and charges every single student the same rate for a set number of years. Instead of spreading the cost out to the entire tax base, instead of spreading the cost out to the entire tax base, students collectively pay a tax for the privilege of attending college. This is a universal access model. There is no discrimination. The downsides are that there is no price signaling, as the government would be unlikely to charge different rates based on quality. You run significant risk of the best opting out of this system. And lastly, these ISAs or income share agreements would need to be accompanied by price controls in order to function properly. I wanna emphasize that these are the broad theoretical underpinnings of income share agreements. Furthermore, this isn't necessarily an either or situation. It's entirely possible that loans and income share agreements can both exist to finance higher education side by side, tools in a toolbox. With that, I wanna invite up the first panel, moderated by Jason Delisle, and this is a group of people who are trying to implement different models of income share agreements. Thank you very much.