On WaPo Mitch Daniels goes over the particulars of Income Share Agreements:
In an ISA, a student borrows nothing but rather has his or her education supported by an investor, in return for a contract to pay a specified percentage of income for a fixed number of years after graduation. Rates and time vary with the discipline of the degree achieved and the amount of tuition assistance the student obtained.
An ISA is dramatically more student-friendly than a loan. All the risk shifts from the student to the investing entity; if a career starts slowly, or not at all, the student’s obligation drops or goes to zero. Think of an ISA as equity instead of debt, or as working one’s way through college — after college.
I could see this for a trade school or technical college, but for the general college student I have to wonder, because buried in this is the assumption that it’s all about the income the student will earn afterwards. Is this a good way to look at advancing one’s education?
It reminds me of an assertion I made a couple of years ago, which now I cannot find, justifying, on a libertarian basis, the liberal funding of public universities via taxation, the rationale being that those who benefit most should pay the most, and those who benefit the most from education aren’t the students, but society itself. It’s not an obvious conclusion, but it becomes more and more clear as we consider how important it is to have educated, knowledgeable citizens. Forcing a penniless student to pay for the privilege of becoming an important part of society, today and tomorrow, seems like madness, once the proper description of the critical role education, and educated people, fill in society is formulated.
An ISA, in this view, becomes simply a nail in the coffin of the responsible view enunciated above, doesn’t it? It sounds innovative to the person who has already bought into the notion that the student should pay for their education, underscoring the mistaken notion that education is simply another product. To me, questions concerning how investors evaluate students, how much an MD vs and English major is worth, potential litigation involving students who don’t use their degree (I know a few) and yet make a good living, insurance against your student dying, the entire thing sounds less like a business undertaking and more like a fiasco.
Sure, these are just surface thoughts, but I’m not feeling the love for a proposal which runs on false notions of the nature of education.
