There’s a concept that is starting to gain some steam in college tuition funding called “Income Share Agreements”. The basis of these agreements is pretty much “I” (the investor) pays “you” (the student) to go to college and get an education. Once you graduate and get a job, I take some of your annual salary for an agreed-upon time.
From the Washington Post:
I like this alternative to student loans because it puts much of the risk on the investor and away from the student. Also, if higher education institutions get involved with these kinds of investment funds, it truly puts accountability back on their organization to ensure they are producing graduates who are desired and prepared.
Purdue University has been doing a ton of testing with these types of agreements:
All of this gets you to think about what might be possible if we walked away from traditional student loan programs altogether!
- The amount of your investment into a student returned more than you could make on the stock market?
- Students had to present themselves, as high schoolers, to investment groups to get funding for university?
- Investors and investing groups were only willing to fund students in careers where they could get a good return on investment? Say goodbye to history majors!
- College students had to meet with their investors and explain why they got a “C” and missed class because they were drunk!?
- Organizations and HR Departments started investing in potential future talent in a very real way!?
I love disruption to traditional things we have come to believe just can’t be changed. This isn’t perfect and there are a lot of questions, but it’s worth testing and trying. What we know is traditional student loan programs are not working at all! Something has to change.
I’m GenX and a Capitalist, so I love the accountability of both the investor having to make sound, prudent investment decisions around who they feel is most likely to give them a great return on investment, and the student’s accountability of understanding there’s a cost/benefit to your career choices and what it will cost to pay back those choices.
What do you think? Would you allow one of your kids to get into one of these arrangements, or would you have been willing to do this in college? I think I would have had very few people want to invest in me, but those who did would have been paid back in spades!