Nearly all education should be funded by income sharing agreements.
E1 = student’s expected income without the credential / training (for the next n years).
E2 = student’s expected income with the credentia / training (over the next n years). Machine learning can estimate this separately for each student.
C = cost of the program
R = Percent of income above E1 that student must pay back = (E2-E1)/C
Give students a list of majors / courses / coaches / apprenticeships, etc. with an estimate of expected income E2 and rate of repayment R.
Benefits:
This will seamlessly sort students into programs that actually benefit them.
Programs that lie or misestimate their own value will be bankrupted (instead of saddling the student with debt). Schools must maximize effectiveness, not merely enrollment (the current model).
There would be zero financial barriers to entry for poorer students, which is equivalent to Bernie’s “free college”, except you get nudged toward training that is actually useful instead of easy or entertaining. Also, this could be achieved without raising taxes one iota.
If “n years” is long, then schools will optimize for lifetime earnings, not just “get a job now”. This could incentivize schools to invest in lifelong learning, networking, etc.
Obviously, rich students could still pay out of pocket up front (since they are nearly guaranteed a high income, they might not want to give a percent away).
I like this idea, but I’m still pretty negative about the entire idea of college as a job-training experience, and I’m worried that this proposal doesn’t really address what I see as a key concern with that framework.
I agree with Bryan Caplan that the reason why people go to college is mainly to signal their abilities. However, it’s an expensive signal—one that could be better served by just getting a job and using the job to signal to future employers instead. Plus, then there would be fewer costs on the individual if they did that, and less ‘exploitation’ via lock-in (which is what this proposed system kind of does).
The reason why people don’t just get a job out of high school is still unclear to me, but this is perhaps the best explanation: employers are just very skeptical of anyone without a college degree being high quality, which makes getting one nearly a requirement even for entry level roles. Hypothetically however, if you can pass the initial barrier and get 4 years worth of working experience right out of high school, that would be better than going to college (from a job-training and perhaps even signaling perspective).
Unfortunately, this proposal, while much better than the status quo, would perpetuate the notion that colleges are job-training grounds. In my opinion, this notion wastes nearly everyone’s time. I think the right thing to do might be to combine this proposal with Caplan’s by just eliminating subsidies to college.
Can you explain what you mean by the problem of job training?
You mean job vs. career vs. calling?
If by “job training” you mean maximizing short-run over long-run earnings, I agree with you. But for that reason, if you move the “slider” toward a longer payoff period, then the schools will be incentivized to teach more fundamental skills, not short-term “job training”.
On the other hand, sometimes people just need to get their foot in the door to get up and running. As they accumulate savings, on the job experience, professional networks, etc. even a good “first job” can give a lifetime boost.
A lot of people I grew up with have the “cold start” or “failure to launch” problem, where they never get into a good-enough paying job and just spin their wheels as the years go by, never gaining traction. For them even getting a foot in the door will get the ball rolling.
Nearly all education should be funded by income sharing agreements.
E1 = student’s expected income without the credential / training (for the next n years).
E2 = student’s expected income with the credentia / training (over the next n years). Machine learning can estimate this separately for each student.
C = cost of the program
R = Percent of income above E1 that student must pay back = (E2-E1)/C
Give students a list of majors / courses / coaches / apprenticeships, etc. with an estimate of expected income E2 and rate of repayment R.
Benefits:
This will seamlessly sort students into programs that actually benefit them.
Programs that lie or misestimate their own value will be bankrupted (instead of saddling the student with debt). Schools must maximize effectiveness, not merely enrollment (the current model).
There would be zero financial barriers to entry for poorer students, which is equivalent to Bernie’s “free college”, except you get nudged toward training that is actually useful instead of easy or entertaining. Also, this could be achieved without raising taxes one iota.
If “n years” is long, then schools will optimize for lifetime earnings, not just “get a job now”. This could incentivize schools to invest in lifelong learning, networking, etc.
Obviously, rich students could still pay out of pocket up front (since they are nearly guaranteed a high income, they might not want to give a percent away).
I like this idea, but I’m still pretty negative about the entire idea of college as a job-training experience, and I’m worried that this proposal doesn’t really address what I see as a key concern with that framework.
I agree with Bryan Caplan that the reason why people go to college is mainly to signal their abilities. However, it’s an expensive signal—one that could be better served by just getting a job and using the job to signal to future employers instead. Plus, then there would be fewer costs on the individual if they did that, and less ‘exploitation’ via lock-in (which is what this proposed system kind of does).
The reason why people don’t just get a job out of high school is still unclear to me, but this is perhaps the best explanation: employers are just very skeptical of anyone without a college degree being high quality, which makes getting one nearly a requirement even for entry level roles. Hypothetically however, if you can pass the initial barrier and get 4 years worth of working experience right out of high school, that would be better than going to college (from a job-training and perhaps even signaling perspective).
Unfortunately, this proposal, while much better than the status quo, would perpetuate the notion that colleges are job-training grounds. In my opinion, this notion wastes nearly everyone’s time. I think the right thing to do might be to combine this proposal with Caplan’s by just eliminating subsidies to college.
Can you explain what you mean by the problem of job training?
You mean job vs. career vs. calling?
If by “job training” you mean maximizing short-run over long-run earnings, I agree with you. But for that reason, if you move the “slider” toward a longer payoff period, then the schools will be incentivized to teach more fundamental skills, not short-term “job training”.
On the other hand, sometimes people just need to get their foot in the door to get up and running. As they accumulate savings, on the job experience, professional networks, etc. even a good “first job” can give a lifetime boost.
A lot of people I grew up with have the “cold start” or “failure to launch” problem, where they never get into a good-enough paying job and just spin their wheels as the years go by, never gaining traction. For them even getting a foot in the door will get the ball rolling.