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Tieing the cost of the tuition to your future income probably won't work. High flyers are not going to opt-in to it. Why choose the '% of future income' option

Tieing the cost of the tuition to your future income probably won't work. High flyers are not going to opt-in to it. Why choose the '% of future income' option if you are sure you will make so much that you will end up paying 2x or 3x the sticker price? Without some people over paying, you have no money to subsidize those that can't pay the full tuition. No one ever mentions a time horizon on the repayment either. Are we talking 3% for life? 3% for 10 years? If they put a time limit on it, what stops me from just taking some kind of deferred income option? If they don't have a time limit on it, how can they claim my undergrad degree is driving my income 30 years later?

_delirium 14y ago
> If they don't have a time limit on it, how can they claim my undergrad degree is driving my income 30 years later? How can you claim that with any equity model? If you get 3% equity for being an early employee, you have a 3% claim to it forever (unless you sell), even if you can't realistically claim to be still driving the company's profitability 30 years later. That's just how equity models work. Now, you can critique them (Marxists, for example, make exactly that critique, that long-delayed dividends have lost any real relationship to the original service performed), but for better or worse it's a widespread model. I don't see why it'd be any worse with equity-for-education. Like a startup, you're betting that an n% equity stake is a fair risk-adjusted compensation to give a funder in return for them providing some up-front funding right now, and shouldering the uncertainty w.r.t. whether your future earnings will ever be sufficient to repay them. Sometimes it means you end up paying much more than the education is worth; other times, much less. Same as with VCs and startups.
pjscott 14y ago
You're assuming that someone's lifetime future income is predictable before they enter college. To some extent that's true, but there are enough exceptions to keep things interesting -- and you only need a few exceptions who get a lot richer than anybody expected. (The same thing applies to venture capital, incidentally.)

_delirium 14y ago

> If they don't have a time limit on it, how can they claim my undergrad degree is driving my income 30 years later? How can you claim that with any equity model? If you get 3% equity for being an early employee, you have a 3% claim to it forever (unless you sell), even if you can't realistically claim to be still driving the company's profitability 30 years later. That's just how equity models work. Now, you can critique them (Marxists, for example, make exactly that critique, that long-delayed dividends have lost any real relationship to the original service performed), but for better or worse it's a widespread model. I don't see why it'd be any worse with equity-for-education. Like a startup, you're betting that an n% equity stake is a fair risk-adjusted compensation to give a funder in return for them providing some up-front funding right now, and shouldering the uncertainty w.r.t. whether your future earnings will ever be sufficient to repay them. Sometimes it means you end up paying much more than the education is worth; other times, much less. Same as with VCs and startups.

pjscott 14y ago

You're assuming that someone's lifetime future income is predictable before they enter college. To some extent that's true, but there are enough exceptions to keep things interesting -- and you only need a few exceptions who get a lot richer than anybody expected. (The same thing applies to venture capital, incidentally.)