It is selling, because the loan is backed by the ISA. Which means if Lambda can not repay the loan, the loaning company now owns the ISA and can use any sort of aggressive tactics to get the student to repay their ISA.
Just like if you take out a mortgage on a house and fail to pay the loan back, then the bank owns the house.
In this case since the ISA is used as collateral, the company that originated the loan now owns a lien on the ISA, effectively giving it ownership.
Similar to when you lease a car, there is a company that provides the finances for the lease, and has a lien on the car, which means you do not own it. Otherwise you could lease a car for $250/mo, then sell it the next day for $30k, but you can't because there is a lien on the title.
So in this case, while the loan is outstanding, the originating loan company effectively owns the asset used for collateral. Ownership means you have 100% control over the asset, and in this case, Lambda has given away 100% control over the ISA.
It also means that they are not aligned anymore, since they have received financial compensation for the ISA up front, they can default on their repayment of the loan as it doesn't matter because the collateral aren't shares in their company, but just the ISA itself.
I don't think that's quite right. Lambda is taking out loans against the ISA but the only way to discharge the debt is by declaring bankruptcy. If Lambda defaults on these loans the bank will indeed own them but won't be satisfied just taking back the ISA contracts and enforcing them themselves (and presumably, if they default, the ISAs aren't worth what they were financed at anyway). Lambda is still on the hook for the full balance of the debt unless they want to close up and liquidate or file chapter 11.
Just like if you take out a mortgage on a house and fail to pay the loan back, then the bank owns the house.
In this case since the ISA is used as collateral, the company that originated the loan now owns a lien on the ISA, effectively giving it ownership.
Similar to when you lease a car, there is a company that provides the finances for the lease, and has a lien on the car, which means you do not own it. Otherwise you could lease a car for $250/mo, then sell it the next day for $30k, but you can't because there is a lien on the title.
So in this case, while the loan is outstanding, the originating loan company effectively owns the asset used for collateral. Ownership means you have 100% control over the asset, and in this case, Lambda has given away 100% control over the ISA.
It also means that they are not aligned anymore, since they have received financial compensation for the ISA up front, they can default on their repayment of the loan as it doesn't matter because the collateral aren't shares in their company, but just the ISA itself.