Can “Human Capital Contracts” Solve The Higher Education Bubble?

At the Grand Forks Herald, higher education apologist Tom Dennis thinks that so-called “human capital contracts” could be the solution to the surging costs associated with getting a degree.

The contract would have investors paying for a students education in exchange for a portion of that student’s future earnings. In practice it seems a bit too much like indentured servitude for my tastes, but on paper it makes sense. Investors would want to ensure that the students they fund pursue degrees that will produce enough income to make their investment profitable. Students interested in the proverbial “underwater basket weaving” degree paths wouldn’t attract investors.

Could it work? Maybe. The problem is that these investors and students would still have to operate in a higher education market that has been bloated by government subsidies. In free markets, businesses operate to serve their customers. They try and provide the best products/services possible at competitive prices. But higher education isn’t a free market. Rather, most universities are operated not to serve the students but rather to harvest the government-subsidized loans and grants that come attached with them.

The colleges get their money up front. The student is stuck trying to pay off the government for the rest of his/her life. Colleges can afford to keep jacking up the prices because the politicians keep doling out more money.

Until that vicious cycle is broken, and the cost of higher education is allowed to return to market-based prices, no “human capital contracts” are ever going to have an impact.

Update: Whistler reminds me that these “human capital contracts” sound a bit like the personal incorporations described in the excellent science fiction book, The Unincorporated Man.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • 2hotel9

    What a load of sh*t.

  • sbark

    Dark Ages Servitude………anything to keep the higher ed gravy train rolling

  • headward

    Sounds like some risky investing.  What prevents the students from filing bankruptcy and screwing the investor?  The government made student loans stick through that process but may screw investors.

    • http://nofreelunch.areavoices.com/ Kevin Flanagan

      I assume this debt wouldn’t be dis-chargeable like government student loans are now.

    • http://sayanythingblog.com Rob

      That’s the risk investors would have to take, I guess.

      Probably investors would form firms who would dole out the money to students based on certain criteria in order to spread out the risk.

  • http://realitybasedbob.sayanythingblog.com/ realitybasedbob

    It’s hilarious the extent capitalists will go to avoid work. Darn elite moochers. 

    • Guest

       ” Darn elite moochers.”

      • http://realitybasedbob.sayanythingblog.com/ realitybasedbob

        Obama Criticized For Living In Lavish Mansion While Most Americans Struggle To Make Ends Meet

        • 2hotel9

           Yes, boob, you racist Democrat Party c*nts are racist. We. Get. It.You. Stupid .C*nt.

    • 2hotel9

       Yes, welfare whores like you are funny.

  • borborygmi

    You have it right indentured servitude.  

    • 2hotel9

       Yep, welfare whores like you are slaves. We. Get. It. Stupid. C*nt.

  • Ryan

    One possible solution to Higher Ed issue is the time spent earning a degree.  Why should I have to take 2 years of liberal arts classes (History of Jazz), when I am getting a degree in Engineering.  Get the kids in and get them out learning what is required for their career.  No more concern should be spent to making them a “well rounded person”.  It costs to much.

    • http://sayanythingblog.com Rob

      Good point, Ryan.  A problem over all is that our colleges have started selling the “college experience” as opposed to training for a career path.

      • borborygmi

        For centuries the purpose of a higher ed education was to round out the person,  if they wanted to go directly to the trade/career path you went to a trade school. It is a liberal arts education.  Professional took extended post graduate courses.   Some University somewhere will come up with an acclerated program.    Raise the level Acts or Sat that you have to pass for entrance and you will cut the enrollment  by a lot .

    • Neiman

      It can be reasonably argued that an engineer or doctor cannot be truly competent in their field without that “well rounded” education. I recall at Electro Engineers in San Leandro, CA, every engineer was required to be competent to work every job in the plant and associated job in the field before they were ever allowed to produce their first blueprint. They had to be familiar with many parts of life to be able to understand beyond their figures and drawings.

      It is like a majority of conservatives today, they will not look up from their green eye shades and see people, they just want to balance the books and make money, and they only look upon the masses as hindrances to those goals.They need to know more about the world and that means about people or they are condemned to lose this country.

      • borborygmi

        Excellant Neiman.  I applaud you.    I think a study of all religions should be taught from Middle School up.  

        It is like a majority of conservatives today, they will not look up from their green eye shades and see people, they just want to balance the books and make money, and they only look upon the masses as hindrances to those goals …..one of the best lines I have read on this blog.

        • Neiman

          First, please do not think my scolding of conservatives from time to time solely as a matter of principle, means I am suddenly liberal or anti-conservative. I believe in basic conservatives principles,I simply think we conservatives can do better in how we communicate them words and actions in a manner that will bring others on board and makes this life better.

          While I would not be adverse to other religions being taught as a matter of history or comparative religions, I maintain as did our founding fathers that when we abandon our moral principles, we fail as a people and like them, I believe the 10 Commandments, as well as other basic Judeo-Christian morality best serves the needs of everyone.

          • borborygmi

            At least you have put people over material.  

  • mickey_moussaoui

    I don’t see this taking off. The really good students are already getting tentative job offers in their senior year and it doesn’t cost the corporation any risk. I know a family whose son was going to Michigan Tech and in his senior year was “drafted” more or less to work for the oil industry in ND after graduation. He started out at $100G. That paycheck was all the incentive the employer needed to get his loyalty. This same thing happens with the pharmacy degrees all the time. The best get job offers before they graduate.

  • http://Sayanythingblog.com The Whistler

    The basic premise is that the education process would be improved because the school would have a stake in their future.  I think they’d look at it that they should bring in as many people as they can even if they’re a likely drop out in case one of them turns out to be Bill Gates.

    One Free Man!

    • mickey_moussaoui

      Agree. They would just continue with the rubber stamp degrees

  • Neiman

    I have an idea, let us run it up the flagpole and see who salutes it. (1) A student studies hard and gets good grades through high school. This may require less indulgent parents that turn off the television and the computer games, encouraging their children to be responsible and study hard. (2) They either qualify for grants by good grades (or being athletic stars) or they pay for college, sometimes by starting at junior colleges, working after school and sacrificing to get that degree. (3) Their parents sacrifice and pay for all or part of that college education and for the moral good of their children, they still ask their kids, even rich kids to work part-time to help pay for their own education. (4) They go to Ronald McDonald university and get a certificate in burger flipping.

    No, I know its silly, but it was worth suggesting.

    • http://Sayanythingblog.com The Whistler

       That’s just crazy.  There’s no way that that system will be able to prop up today’s educational system with all of the non-teaching faculty and overly redundant do nothing administrators. 

      • Neiman

        I know, it is nuts. But, I just thought it would be fun to pretend it was a better way. Back when I was young, yes I know it was a hundred years ago, that system seemed to have some validity – but no more. Thanks for correcting the errors of my way.

  • Hannitized, Proofs obsession

    Conservatives can’t stand the idea that the majority of Americans would be educated.  They don’t like the idea that everyone wants to be management, because rich people require the uneducated to profit for themselves.

    • mickey_moussaoui

      You are an idiot. That much is clear. Only 25% of our population has any post HS education. Look it up moron.
      Smart people make more money for those conservatives who run business. Idiots like you come a dime a dozen.

      • Hannitized, Proofs obsession

        That’s why it’s called an “idea” and not a fact, you twit.  Further, you unwittingly undermined Rob’s argument that there is an education bubble.

        Your reading comprehension is terrible.  You’re just a peon.

        • mickey_moussaoui

          No you are an idiot to assume that you have any IDEA what you are talking about. Do the world a favor and phucking die, Debbie

          • Hannitized, Proofs obsession

            So how is 25% of the population a “bubble”? It’s not.

            Conservatives just don’t want Americans educated.

          • 2hotel9

             More lies and sh*t spew from the lie and sh*t spewing c*nt that calls itself tranni.

        • 2hotel9

           More lies and sh*t spew from the lie and sh*t spewing c*nt that calls itself tranni.

    • http://sayanythingblog.com Rob

      It’s not that conservatives oppose education.  It’s that conservatives don’t think the status quo in higher education is doing a very good job.

      • Hannitized, Proofs obsession

        That certainly doesn’t explain why you are whining about a “bubble”, now, does it?

        • 2hotel9

           More lies and sh*t spew from the lie and sh*t spewing c*nt that calls itself tranni.

    • 2hotel9

       More lies and sh*t spew from the lie and sh*t spewing c*nt that calls itself tranni.

    • suitepotato

      If everyone gets the exact same education, there has to be a new elite level above it to separate the common applicant from the preferred. If everyone goes to college, the bachelor’s degree becomes the new high school diploma. Then people need a master’s to get noticed and get decent paying jobs. Then they go for their doctorates.

      Conservatives if anything would prefer an end to all that nonsense. Just a generation ago, high school dropouts could come in at entry level and retire as middle management. Now, everyone below the level of lead/supervisor is hard-pressed to have a bachelor’s degree. This system of alleged education has led to an industry of overpaid teachers who don’t teach, people graduating without meeting any real criteria, diplomas not worth the paper they are printed on, and an entrenched upper middle class elite of world-blind fools who paint themselves as poor by comparing themselves to billionaires.

      The average person is potentially smart enough as they are. They don’t need ministering of special knowledge from elites in universities, they don’t need talismanic documents attesting to lies about their capabilities, and they don’t need liberal assholes like you taking care of them.

      • Hannitized, Proofs obsession

        That’s a fascinating diatribe, although worthless, coming from a welfare whore who used public assistance to lift himself from the ghetto through the pathway of education.

        You are a fool, and you and people like you are the reason why India and China are eating our lunch.

        If everyone goes to college, the bachelor’s degree becomes the new high school diploma. Then people need a master’s to get noticed and get decent paying jobs. Then they go for their doctorates.

        Conservative if anything would prefer an end to all that nonsense. Just a generation ago, high school dropouts could come in at entry level and retire as middle management…

        Idiotic!

        If you can’t compete in the work force, go to Mexico.

  • Jamermorrow

    I think this would drive up costs even further. Once again the consumer (student) would not care what school costs because it would be getting paid for him. People tend to favor consumption in the present rather than in the future. Most of the time people are not to worried about the future. We tend to overestimate our need in the present and underestimate our need in the future. 

  • harun sut
  • 2hotel9

    I see that our resident leftards have jumped in and NOT addressed the point, which is creating a new, totally stupid and massively expensive government run boondoggle. How typical.

    America has the worst public and secondary education systems on this planet, thanks to the Democrat Party and their unionscum. Good job, leftards, you have gotten what you wanted, a broken, f*cked up school system. Good job.

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