Saturday, January 27, 2007

Should not Higher Education be more of a joint venture?

Hearing so many young professionals in the USA describing their problems with debts they incurred while studying, I guess that soon some of them could be suing their Alma Maters for misrepresentation or plain failure in delivering the services offered.

Perhaps the incentive structure of the education system needs to be revised so that at least some of the higher education providers offer to collect a part of their fees through a profit participation scheme, like for instance by receiving a small percentage of the student’s future earned gross income that is above the level that the student could have been estimated to earn without further education, during his first 20 years of work.

How are then the universities going to pay for their professors now? Easy, that is what the financial markets are for. These participations in the future of our youngsters could be securitized and sold in the markets, perhaps even as a good investment for a professor’s retirement fund… of course, that is if the professor delivers on his promises.

For a university to show a willingness to invest in their own students, because they are sure of what they are giving them, might be a better marketing tool than outright grants and “we invest our money in your future” is my slogan. Also, for students, the question of what university offers to invests the most present dollars against the smallest percentage of their expected future earnings... should rank among the first when selecting an Alma Mater into which to invest their own future.

Estudiantes ¡Alerta¡ Published March, 2007, El Universal, Caracas

PS. A tweet August 2018: “Instead of taking on debt, perhaps students should go for crowdfunding their study costs, offering to pay a percentage of their incomes during their first 15 after graduation years… perhaps even insurance companies would (should) like to invest in their future”... in a follow up tweet: Would the IRS be willing to certificate the incomes of these students for the investors?
If they did so, surely would the investors want their professors to have some, a lot, of skin in the game too?

PS. Many investments offer must be accompanied by warnings. Have you ever heard a University say: "Warning, the final financial compensations for the education you obtain with us, might not suffice to repay the debts you take on in order to study with us”?

PS. A tweet July 2019: "If anyone had sold investment plans with as little risk disclosure universities and professors do when selling investments in their education plans, and then the investments had soured, he would probably be trotting away to prison."

PS. A tweet July 2019: "Of those entire student debts some are suggesting should be condoned at taxpayers’ expense, how much should those colleges, universities and professors, who got all the money from those loans, have to absorb?"

PS. Nonetheless those who need to keep the by far larger stake in their future earnings, perhaps at least 75%, are the students. You would never ever want to share out so much that it creates incentives for them walking away from it all, one way or another.

PS. We need student debt service data, like default rates, for each university, so as to allow the market to help correct some education failures.