What about a different finance plan on education?

Question

Obviously Student debt is too high.  Not merely the excessive cost rise but the continuing debt burden.  

So what about linking education to future income.  A college or university gives away classes and courses based on availability.  A student is required to pay some percentage (15%) of his future income back to the school, college or university for a period of years based on how long it took them to complete the program.  EX:  3 years of classes = 3 X 3 or 9 years of 15% of their total income.  Go back and get a masters = 2 X 3 or 6 total years of paying 15% of total salary to the school.  

This would incentivize the schools to provide classes for legitimate skills and for talented prospects.  The schools would be burdened by those loafs that major in underwater basket weaving and have to earn their livelihood dishing out Burgers by the Billions.  Longer programs like Med school get longer return on school costs. 

In reality, students appear to be the worst at choosing a program that is both cost effective and legitimate for their own future ability to earn.  The schools can better optimize matching a student with skills and training to give them a better return on their investment of time, classes and resources.  It would also give them incentive to increase classes in high demand professions and decrease classes where the return is lower.  No one would major in equestrian studies and more would be pushed toward engineering.   What the market demands is what the universities would produce.

? · Accepted Answer

Your idea is great. The implementation would be problematic at best. Colleges are in the business of providing education for a fee (tuition). The fee is paid by the student (maybe from parents), a scholarship fund, or some sort of subsidy (corp/gov't grant/loan). With the exception of the scholarship - which is usually applied directly to the tuition, the other payments go through the student.

What happens when the student gets the loan, pays the tuition, but refuses to pay the loan back? If mom/dad was the source, the result is a strained relationship perhaps. If the gov't or a bank is the source, the result is bad credit and never-ending phone calls and letters harassing the student.

But in any case, the university gets the tuition money and goes on about its business. If the university was in the business of giving out 'free' classes with the hope that students pay back the cost over time -- hmmm, based on default rates on student loans, what would the university be forced to do? Become a collections agency (or hire one) to continually harass students who won't or cannot pay back the loans. 

It would be interesting to see if this concept could be applied. Obviously there would be an administrative cost of managing the process. Universities could build up a staff to deal with it - or outsource it to a collections agency. 

You are on to an interesting idea. Have you approached any universities with it?

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What about a different finance plan on education?

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