by Patrick Appel
A reader writes:
Come on, this is such an awful idea. We are already seeing a huge problem with people going to college, majoring in a field with not a lot of job prospects, and then not making a lot of money as a result. Why the hell would you take a student majoring in a field with strong earnings prospects (i.e. any of the engineering fields) and have them heavily subsidize students majoring in fields with no earnings prospects?
Another reader is less dismissive:
The idea of paying for college with a percentage of future earnings isn't entirely a new one. I recall students talking about private investors interested in making similar deals back when I was an undergrad in the late 1990's. Here's an article from 2008 about a student who tried to do this on his own on eBay.
The only thing really "novel" about the idea in the post is that it'd be the university itself, not private investors, on the other side of the deal. I have my doubts about it. In over a decade of hearing about this idea, even getting a few private investors interested has been very difficult. If you can't get a few investors, I don't know what hope there is in convincing an entire state university system to give it a shot.
What I'd be more interested in knowing is what percent of people's income currently goes towards financing their student loans? On average is it much different than the 5% of income mentioned here? Obviously for some it may be, and other's it isn't. For high income earnings, this 5% rule may be a bad deal.
If young students can even somewhat accurately predict their future earnings (granted, given most undergrads I've met, they can't), you may run into a "lemon" problem where the only students who want to participate are the ones most certain they won't ever be earning much. That is, only "interpretive dance" majors (to unfairly pick on a group) would participate, but business school students would be more likely to opt out. That is, if opting out is allowed under these students' plan. Are the students suggesting that potential students have no choice but to give up 5% of their future earnings?
The Dish 