I like it.
..What do you do about the kids who borrow for expensive school but can't get work afterwards that pays well enough? Does someone need to make the kids go through a "business plan" to make sure they can pay it back and withhold money if it doesn't pass?
I like gimp's caveat's here, although I don't think gimp likes them.
I would run it like a business, but limit it to family and make the interest rate something very low like 1%. Maybe it wouldn't be a trust, maybe an endowment of some sort?? I would hire a person, a CPA firm, a law firm for $10-20K/yr to facilitate the financial operations and "approve" loan requests.
If someone wanted to take out a $240,000 loan to study Sanskrit, DENIED. (Bonus points if someone can guess what movie that college major refers to)
If someone wanted to take out a $100,000 loan to study dance at
Juilliard, well, they better be a damn good dancer.
I would try to create a loose set of rules governing approval of loans, but ultimately leave it up to the discretion of the person in charge. As long as they are substantially improving themselves and their abilities, going to a reasonably priced school, and showing some insights into how they would be able to repay the loan based on earning capacity, loan approved.
Then after they'd repaid 25% I'd write off the remainder.
As to the point and purpose Rebs, as Gin stated earlier it would be to make sure all your descendants have access to an education without leaving it in the hands of the government or their parents. I've considered some way of funding future generations of Stackers if I hit one of those crazy CFireSim runs where I leave earth with millions. Seems like a cool thing to do.