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

With Apologies to Rick and Morty

[Anonymous Coward]

"and are required to pay back a percentage of their income after graduation"

That just sounds like slavery with extra steps.

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.

Re: With Apologies to Rick and Morty

[Bengie]

From the holistic view, it changes who holds the most risk. Instead of school getting paid no matter what, they most likely only get paid and get paid the most if they create decent employees.

Re: With Apologies to Rick and Morty

[Anonymous Coward]

So I guess the basket weaving degrees will go away right? Since if they really are useless not enough of their graduates would end up playing back.

Second: those that do better than average will pay way more than they would otherwise since they have to cover the cost of all the people that got the degrees but were unfortunate.

Next: what happens if you fail to graduate? You're partial degree doesn't get you better pay from Walmart but your 2 yrs in school cost real dollars. Deferring paying makes any idiot that can get in take a shot at it unless you make them pay the full amount when they drop out ... a very expensive pay after delivery idea.

Lastly: they are offering half year programs in nursing and cyber security: what jobs are available for people in either of those fields with highschool + 6mths worth of education? I could be wrong (it happens) but that sounds silly to me. Nursing is a regulated profession in most places, cyber security maybe more of the wild west but if I'm hiring someone to come in I want them to know more than the IT guys I already have which to me means more education than them not 1/8th albeit highly focused.

Re: With Apologies to Rick and Morty

[Archangel Michael]

Basket Weaving is long been dead. The modern equivalent is the anti-male, anti-patriarchy, anti-european/anti-asian, victimology classes and programs being offered by the socialists in colleges, collectively and jokingly called "Lesbian Dance Theory". There are entire departments at some universities that would cease to exist if they had to justify their fancy barista degrees with post education returns.

These are classes and programs designed to train people to offer those classes and programs elsewhere. There is no actual job that has requirements to know anything about these made up subjects.

But don't worry, someone will come along and tell you why this post is part of the white hetero-normative male patriarchy oppression that is keeping the aggrieved parties unemployed. Because successful people are evil!

Re: With Apologies to Rick and Morty

[Archangel Michael]

Actual basket weaving is still useful, if under appreciated. If I weave a basket, and I've produced something tangible and that has some value, functional and perhaps even artistic. It can and will exist long after the maker is gone if care is taken to preserve it. A basket weaver of significant skill and artistry will create a demand for their product. Voluntary transactions between willing participants will ensue creating a value to society. This is a hierarchy of value that doesn't respect arbitrary groupings by neo-fascist identity politics.

Re: With Apologies to Rick and Morty

[ShanghaiBill]

OTOH, if the degrees and certifications are being sold as personal enrichment, then that's a different matter ...

Nobody should be taking on debt for "personal enrichment". If you need to borrow money to go to college, then you need a degree that justifies the expense.

The art history and philosophy degrees are for students with rich parents.

Re: With Apologies to Rick and Morty

[Immerman]

I agree with your disagreement - however, so long as colleges are *marketed* primarily as work-training schools, it would be nice if they actually delivered. Nobody is going several years salary (if they're lucky) into debt to acquire valuable sociological perspective.

Re: With Apologies to Rick and Morty

[Archangel Michael]

The idea of well rounded education is long been touted, but with the advent of the internet, and the wide spread nature of information has eliminated the barrier from 200 years ago concerning who has access to that information.

Further, it is clear from many actions/reactions from colleges that broad / diverse ideas are almost outlawed, and only nominal group think is permitted.

It is my opinion that your argument is being used to foster the antitheses of what you're trying to present as a good.

Don't get me wrong, actual broad and diverse knowledge DOES in fact help both individuals and society as a whole. The humanities however have become the playground for progressive fascists who have no idea what a well rounded education ought to be.

At this point, it is better to pick up a book on your own and expand your own self rather that subject yourself to the short sighted bigots proffering "Lesbian Dance Theory" indoctrination centers as the way to better yourself. It isn't. Education shouldn't end when you leave college.

Already exists in some countries

[ark1]

It is called - taxes.

Re:Already exists in some countries

[foghelmut]

Because education is a net benefit to society.

Re:Already exists in some countries

[Gavagai80]

Because an educated society is a more functional society. And if you care for nothing in the world but $$$ and have zero moral scruples, an educated society leads to higher wages and profit on average. It'll cost you more in the long run to keep your neighbors in poverty than it would to educate them into productive taxpayers.

An online bootcamp by any other name....

[Anonymous Coward]

Read the fine print.

1. They say you have to pay them 17-20% of your earnings for _ANY_ job, even if you didn't get that through what they taught you.

2. They do their own financing because they're not an accredited institution, so you can't even use that "degree" elsewhere.

3. They were forced to remove "University" and "Professor" from their language, as those terms were not being used correctly.

4. This is just a bootcamp that charges you $20,000 (up front) or $30,000 (through this scheme) for a 30 week MOOC.

5. Even though they have a $50,000 minimum salary before you have to start repaying (which is deferred for several years until you are at that point), they don't adjust for cost of living. Someone in California or New York (where they hold their schools) will make that and still be below the poverty line.

6. Their success stories are suspect. There was one guy who they claimed landed a full-stack developer position, without also pointing out he had a bachelor's degree, and he had participated in a year-long bootcamp before doing this one.

I wonder where they dreamt up this idea

[Computershack]

Oh wait, it looks EXACTLY LIKE THE METHOD THE UK USES for its student loans repayments. In the UK you're charged a max fee for tuition and the student loans company gives you a student loan to cover that and maintenance which is calculated so there are limits that people can get. You repay the student loan once you start earning over £480 and it is deducted from your pay at a rate of 9% of everything over the £480. After 30 years anything unpaid is written off.

More info here: https://www.gov.uk/repaying-yo...

Maybe colleges should stop being expensive

[Junior J. Junior III]

Or, what if, hear me out now, what if colleges stopped the campus beautification arms race, and quit spending hundreds of millions of dollars on new buildings, and then passed the cost savings on to students?

Re:Or you could just pay for school

[dgatwood]

It's almost impossible now though. A year's tuition costs more than one year's pay, even with scholarships paying 80% of the way, like I had; you're not going to be able to get a job as a high school grad that pays for University now.

There are still state universities in smaller states where you could live and work for a couple of years to get residency, then start college and (barely) scrape by. But you're right that it isn't nearly as easy as it used to be.

For example, my undergrad uni costs about $9,400 in tuition per year. That's less than a year of minimum wage even after taxes. Of course, you have to deal with books, food, and housing, so getting by on minimum wage would pretty much require finding several other people willing to split the rent on a small apartment off campus. But it should be (just barely) possible to work your way through school there without scholarships.

Re:Haven't Ivy leagues done this for decades?

[ranton]

Any country with government paid post-secondary education, and progressive taxation, also does essentially the same thing this article proposes. With progressive taxation, members of society who are most benefiting from their own education and/or the education of their fellow citizens (and employees) pay more of the cost of government. So in affect, they are paying a larger proportion of everyone's "free" post-secondary education.