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Location: LaGrange, Kentucky, United States

The opinions and interests of a husband, analyst and Iraq war veteran.


Wednesday, April 23, 2008

Capital idea!

Tom Sowell, on paying for college:

Another option would be to allow students to sign enforceable contracts by which lenders would pay their college or university expenses in exchange for a given percentage of their future earnings.

That way, students would be issuing stocks to raise capital, the way corporations do, instead of being limited to borrowing money to be paid back in fixed amounts -- the latter being equivalent to issuing corporate bonds.

Not only would this get the conscripted taxpayers out of the picture, it would also make it unnecessary for parents to go into hock to put their children through college.

Still, the financially poorest student in the land could get money to go to college, with a good academic record and a promising career from which to pay dividends on the lender's investment.

More fundamentally, it would confront the prospective college student with the full costs of all the resources required for a college education.

Question though, as I have not studied the figures... How much "human capital contracting" is already going on? Our local Kroger markets have tuition reimbursement programs for students at culinary school, and UPS has a similar program. And wasn't there an popular TV series whose entire premise turned on the idea of repaying investors the cost of a medical degree?

Is Tom suggesting we bring back a proven idea, or is he re-inventing the wheel here? I honestly don't know, but I think it's an intriguing, market-based idea. I'll investigate some more.

(Via: Phi Beta Cons blog UPDATE: which links this CATO analysis, which says MyRichUncle.com is the only outfit actively brokering private loans of the type Sowell mentions)

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