An Open Letter on Financial Innovation to Morehouse College President John Wilson
Every year, I research problems facing our society and present my findings in a white paper complete with comprehensive solutions to the problems. Last year’s problem was the impact that gentrification has on the arrest of African Americans in Washington D.C. The prior year I conducted an extensive analysis on the financial crisis in Detroit and it’s economic impact on the residences of the city. As far as research papers go, the methodology I take to addressing the problem is quite simple: 1. Determine a problem that impacts a group people, 2. Define the underlying causes of that problem, 3. Research conventional methods available and scale them to the level needed to address the problem to produce one of two outcomes; eliminate or reduce the causes of the problem, 4. Submit practical solutions to the necessary agency or group dealing with the problem so that they can enact a positive change. This methodology has proven very effective in solving the problems I have previously researched.
But this year’s problem is much different. Different in the sense that the shear amount of people it affects and how the way this problem is addressed will greatly shape the future. In order to solve this issue, a new groundbreaking economic theory and platform needed to be created.
Here is the quintessence of the problem: The American public owes $1.3 Trillion dollars in student loan debt.
The American student debt crisis is a three part problem. FAFSA and the federal government’s method on assessing student loan eligibility is flawed and outdated; Student debt is centrally owned by several large groups (The United States Government, Sallie Mae, and Nelnet) which creates a large risk bubble to creditors; and upon graduating students have great difficulty finding employment in their field of study, thus making it very hard to pay off one’s student loans while simultaneously ruining their credit scores in the process. This has both macro and micro ramifications. On a macro level the $1.3 Trillion dollar debt not practical for the American public to repay. With a potential $1.3 Trillion dollar default amount, the American economy as a whole is at risk. On a micro level, individuals who receive loans in order to attend college and change their perspective outlooks are financially hindered by the burden of said loans so much so that they end become entrapped by banks seeking repayment. With this in mind I began to search for a solution.
Enter the concept of Anonymous Decentralized Debt and the Vergo.xyz student debt management platform.
Anonymous Decentralized Debt, ADD for short, is the system built on the ethereum platform to decentralize student debt. In order to fully comprehend and appreciate the validity of ADD it is important to understand the definition of the blockchain. Essentially the blockchain is a public ledger where transactions are recorded and confirmed anonymously. Unlike the ledger at you day-today bank, this virtual ledger is shared between many parties effective decentralizing the currency. Because it is simultaneously maintained by many participants, once information is entered it cannot be altered. This leads me to the foundation of Vergo.xyz — Ethereum.
On top of the current Ethereum system my team and I have effectively created a secure blockchain for Vergo.xyz. Rather than a student bearing the entire weight of a loan, Vergo.xyz splits their lump sum debt into blocks which can be traded/transferred between parties. With this in place our system can now effectively change the current status quo in regards to student debt. This has the potential to revolutionize the current distribution of student debt. The technical aspect of this achievement can become rather convoluted, in its most simple terms, Vergo.xyz is the distribution of student debt through anonymous decentralized debt exchange where borrowers credit risk is assessed through the Vergo Platform.
The Vergo Platform, though vital to the Vergo.xyz system, its own entity. Vergo is a risk assessment platform which rates student’s ability to pay off loans based on a variety of criteria similar to a bank issuing a loan. However the Vergo platform is innovative by its own merit. Unlike banks and other loan issuers who look only to the present and your current financial ability to bear the burden of a loan, the Vergo Platform also takes into account your future financial production possibilities based on multiple factors (current gpa, future job prospects, future job mobility, ect.). In this way the Vergo Platform, which we have developed, is revolutionary in its own right. By taking into account not only current factors but potential future variables the system is more comprehensive than nearly all current risk assessment agencies to date. The Vergo Platform does not end its innovation there, it also converts the determined risk into a scale which is easily understood by any person (1 being not a risk, 10 being a great risk).
That’s the beauty of the system. Student debt blocks (SDB) will be randomized and be placed in groups of ten (an SDB package). As the agency that processes the applications, Vergo.xyz will not make individual student’s information available to the public (because that gets rid of a student’s anonymity). However, we will give investors information through the Vergo Platform on the average credit risk score of the SDB package they are buying on an exchange as well as an annual credit assessment of the incoming class. In this way my team and I have already eliminated a negative aspect of student loans — loan discrimination. Because SDB packages are comprised of randomized SDB students retain amenity and are not assessed by their race/religion/ect.
This platform effectively eclipses the current manor in which the issuance of student debt is assessed, making the tandem of the Vergo Platform and Vergo.xyz a direct competitor with the Free Application for Federal Student Aid — FAFSA.
FAFSA is a current behemoth in the student loan issuance market, however, Vergo is the greatest threat to that outdated system. Our system Vergo is superior to FAFSA in three ways; the risk assessment aspect of Vergo encompasses more factors (qualitative and quantitative), Vergo.xyz reduces the burden on individual students by decentralizing the debt (allowing it to be split into several parts and traded), and Vergo is much more user friendly and accessible. These three factors are further developed in the preceding paragraph and in a more in depth conversation we can delve further into Vergo’s dominance over FAFSA. This week my team and I plan to unveil the Vergo Platform and Vergo.xyz to the world.
My team which is comprised of a group of current students at Morehouse College and students abroad, will be unveiling the Vergo Platform and Vergo.xyz at the Morehouse Innovation Expo on this Thursday, April 14th. We would like to cordially invite you and your peers to attend the Innovation Expo. Morehouse Men have always been the vanguard of change. Whether it be Martin Luther King Jr. ushering int the Civil Rights movement, Maynard H. Jackson who challenged the political atmosphere of a segregated south, or Spike Lee and Samuel L. Jackson who disrupted the image of African Americans in the film industry, it is always a Morehouse Man who rises above the rest and challenges the status quo. We believe it is our chance to change the world especially because student debt plagues our own community. 2/3 of college students have to take out some form of student loans. 83% of African Americans take out student loans. 1/3 of students who take out student loans default on those loans. This means that African Americans are disproportionately affect by student loans. We know that our system can give these students who are attending college in hopes to improve their lives a better chance. All we ask of you is your time and undivided attention at the Expo on Thursday, April 14th. We would greatly appreciate your support in this revolutionary effort whether it be financial through scholarships and grants, dedicated office space for the enhancement of our project, or even something as simple as unlimited DCB’s so that we have one less thing to worry about and can continue to change the world.
Feel free to contact me at firstname.lastname@example.org
Aram and The Vergo Team
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