No Tuition, but You Pay a Percentage of Your Income (if You Find a Job) (nytimes.com)

What if there were a way to eliminate student debt? No, really. Student debt reached a new height last year -- a whopping $1.5 trillion. A typical student borrower will have $22,000 in debt by graduation, according to the National Center for Education Statistics. Now, Silicon Valley is backing a novel idea that proposes to rewrite the economics of getting an education. From a report: The concept is deceptively simple: Instead of charging students tuition -- which often requires them to take out thousands of dollars in loans -- students go to school for free and are required to pay back a percentage of their income after graduation, but only if they get a job with a good salary. The idea, known as an Income Share Agreement, or I.S.A., has been experimented with and talked about for years. But what's happening at Lambda School, an online learning start-up founded in 2017 with the backing of Y Combinator, has captivated venture capitalists.

On Tuesday, Lambda will receive $30 million in funding led by one of Peter Thiel's disciples, Geoff Lewis, the founder of Bedrock, along with additional funds from Google Ventures; GGV Capital; Vy Capital; Y Combinator; and the actor-investor Ashton Kutcher, among others. The new funding round values the school at $150 million. The investments will be used to turn Lambda, which has focused on subjects like coding and data science, into a multidisciplinary school offering half-year programs in professions where there is significant hiring demand, like nursing and cybersecurity. It's an expansion that could be a precursor to Lambda becoming a full-scale university.

Comments

Re:With Apologies to Rick and Morty

[Anonymous Coward]

Pretty much.

The idea would make more sense if it's flipped around. The employer pays the school an annual fee based on the level of education achieved, and the school also behaves as a union for the employee, so that all its' graduates actually get decent paying jobs and don't wind up being college graduates working at McDonalds after their dream job doesn't materialize. This would incentiveze universities and colleges to actually produce workers that are needed, instead of the current status quo where students pick whatever program floats their boat and has no practical use at all. If you want to pick a program with no practical use, you're welcome to pay for it out of your own pocket.

If a student has mutiple degrees, then the employer will be paying for ALL of them. An employee at any time may withdraw from the University "union" by paying the full remainder of tuition in full. But until then, any job they get, even at McDonalds, must pay into it. This would also disincentivize some jobs from "requiring" education when it's not truely needed.

If an employee's school credentials is foreign (eg the "doctors are driving cabs, and nurses are being housekeepers" situation that is too frequently true) then the employer is still required to pay into it, however the funds are held in escrow inside the country (Eg Canada, US, Australia, Japan) until the school makes a formal request for it. This ensures that schools are incentivized to keep in contact with their graduates so they get money for tuition owed, and that the money is never handed back to the employee unless their tuition has been paid off.

Re:With Apologies to Rick and Morty

[lgw]

That just sounds like slavery with extra steps.

Would you say the same about a credit card?

With one tweak, I really like this idea: not a percentage of your salary, but a percentage of the amount your salary exceeds the median wage. If you're still working retail after graduation, the college didn't do you any favors.