Startup "Pave" Has the Answer to Shrink Student Debt

Pave Co-Founder on earning real return by Investing in real people rather than stocks you don't understand.
3:00 | 02/18/14

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Transcript for Startup "Pave" Has the Answer to Shrink Student Debt
Meals are drowning in debt more than a trillion dollars of it to let's start up named -- dot com decided to try to use route funding. As an approach to helping that they're looking to link up students -- -- -- with investors. To help them pay back those loans and -- new companies. Here to explain the ideas born bass who -- -- dot com and print or -- here it's a nice to have both of you with us. And Josh what you were just talking about your business. Years and the company is called skinny fatty -- Which is a -- company exactly and are you wearing one of your eyes I actually am. Yes it was like this big before. They tailored. To the whole idea is you take. Wider ties you tailor them down to make them smaller and and you came up with this idea during the recession a lot of people are looking for work you realize that there were a lot of people who didn't -- up to date. Hi. And he wanted to help people look more professional right. Exactly. So this kind of idea that -- dot com is helping. It's a crowd funding. Type of application yes. Exact payment we we harness the power of the crowd and -- -- to fund money on the news that students looking to free themselves from burdensome debt. -- -- partly tasted Josh put up over 60%. For the people of funding themselves and they actually refinance and paying down student. So how does it work in terms of who's allowed to participate in the site is it different from kick starter for example. Yeah I'm a big difference between policy -- on is that we have a is -- -- -- Same case auto when you -- a project that nothing comes back in the house but you might get the product -- -- get a but I think you have punishments. Well we're doing is connecting on one side. Talented -- on the other side with experience and old successful individuals looking to invest in the future generation. -- what happens is. The older generation the success individuals. Actually found people like Josh in exchange for receiving a small percentage of -- future income. -- -- five or ten -- this out like a real world shark tank a little bit. And then -- in the sense that I guess this is an investment in the individual. But -- what we're -- just released is -- to invest in talent groups now. Says that an essay just investing one Joshi -- invest in ten or fifteen don't and his. Doing so -- and -- businesses or ten of fifteen students who just graduated from Columbia exiled. So these are I mean I'm I'm guessing your reasoning behind that is because some of these loans are smaller. And if you're finding individuals would like to invest a considerable amount of money you -- a profile. And you say if your interest in investing in this profile with this kind of return. That's your group. Yeah I think it's partly -- -- to -- vacation so from an investor perspective what we saw was people who love the concept. They're not investing rather than lending and one cent sales of one -- -- This is meant he would diversity had a company fails because people attended ten to -- to have to unseat. -- generally get divestment exposure they can help some the people in that group. And then they gonna get a space table return investing in some most earnings. Is actually very stable compared -- investing in stocks and bonds look kind of return on average do you people who invest in -- it. Would depends -- -- on the type of group of people investing in but we generally Saugus on the tape percent to. 78% so many days like bees where getting. Return in the markets as very volatile this could be volatile too but you're not gonna get paid back for a savings account or just keeping your capital. Set aside so it's the kind of thing that would be attractive for the people. -- the types of people that are funding that's on the other side. What in this -- -- to the people who want to funding and the nice thing coming. One is just the punishments and the other is on the impact actually having. By providing people would -- A way to know actually have to take on more debt because when you take on debt we've seen it forced into decisions that can be sub optimal for a long time period. Lots of young people these days graduating 23000 dollars exactly the typical amount of student -- that people are coming out of college with. They're not buying homes they're not buying cars they're not going after jobs that they would do or taking the risks -- that in many cases turn out to be. The company's -- and up running America. Exactly -- the people actually looking -- I guess investigation nation all tend to be experienced successful professionals. Who won a little bit more than just -- -- -- from the money so they look at this is an impact investment. And we've had people ranging from -- in Alabama to a a successful. -- hedge fund manager here in New York to many different professionals from all walks of life. Joshua white cape why did you go at Hampshire and in payments are really great happen to take me from. By unique small little hobby business select moving my story forward noting mean and mean it was just. Cool to see that I had people backing me not only financially. By means of mentors as well. So he was a great start up for the accident and want to be part of that. -- -- of -- dot com and Josh love skinny fatty is thanks so much about -- for joining us appreciate it thank you.

This transcript has been automatically generated and may not be 100% accurate.

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