An Alternative To Student Loans

Apr 11 2012 @ 10:22am

by Patrick Appel

A novel idea:

Students in California have a proposal. Rather than charging tuition, they'd like public universities in California to take 5% of their salary for the first twenty years following graduation (for incomes between $30,000 and $200,000). Essentially, rather than taking on debt students would like to sell equity in their future earnings.

This means students who make more money after graduation will subsidise lower-earning peers. It is not clear if this will provide adequate revenue for the university. It also means the university bears more risk, because the tuition it will ultimately receive is uncertain. But the proposal will benefit some students and the principle is not so ridiculous.

Earlier looks at student loan debt here and here.