An Innovative New Way To Pay For College

May 27, 2012 in Daily Bulletin

Students at University of California, Riverside, have thought of an innovative way to deal with the problem of rising tuitions reports The Economist: charge students for their education rather than their parents. Highlights of the plan include:

  • Under their plan public universities would offer free education in return for a contractual agreement by the students to pay 5% of their salary for the first 20 years to the university.
  • This would put the university at more risk since its revenue stream would be more uncertain although the students believe that it would double the amount of money coming into the system.
  • This would mean that higher-income students would subsidize lower-income ones through their future earnings. However the current system already has higher-income parents subsidize lower income ones.
  • This might encourage universities to drive resources towards higher income disciplines and away from those such as philosophy.
  • Another concern is that if the policy is not implemented across all universities then those who know they’ll have high salaries will have an incentive to go to universities that charge an up-front tuition, leaving the low-income students to study at the universities that require bond agreements.

To read more about how why this system might be more equitable, but also ways that it might not be, how our idyllic vision of university doesn’t really exist, and the numbers that demonstrate just how concerning the tuition problem has become click here.

Source: The Economist

Via: Freakonomics