The college system is broke fundamentally in how students and family pay for higher education. College loans rise as companies realize they can make money off students and coincidentally the cost of college tuition rises as colleges and universities realize students have access to more money. The only people who lose are the students that become over-leveraged in their debt for spending four years learning to play beer pong on the weekend. It’s like Will Hunting said, “you just spent $150,000 on an education you coulda got at the public library for a $1.50 in late fees.”
Over at the New York Times’s Fixes Blog, David Bornstein floats the interesting idea of paying for college in the same way that venture capitalists pay for start up companies through the lens of a new(ish) company called Lumni.
The one example they provide is the story of a student who needed $8,530 for college to become a nurse in Columbia. Lumni agreed to give him that money in exchange for 14% of his salary for 118 months after graduation. After that his financial commitment ends even if he still owes money, the flip side is that if he ends up making good money the student will end up giving the company more money than the original loan. For the student, that’s essentially ten years knowing that his payment will fluctuate with his salary, but after ten years he’ll no longer be in debt.
Regardless of the potential or pitfalls of this funding arrangement, it’s clear that the current system in America of grants, scholarships and loans is a broken one.