The blogger Evan Soltas has a couple of posts making the case for equity finance of higher education. Basically, instead of taking on debt, students would agree to pay a percentage of their lifetime income to the schools that educate them. You can think of this as venture-capital investments in humans. The goal is to avoid saddling students with debts that are outsized relative to their earnings, and to make it easiest to obtain capital for the most useful college degrees.
Unfortunately, this proposal is fatally plagued with adverse selection problems. Students know more about their post-college plans than people who might invest in them do, and the ones who plan to earn the least money will be the most inclined to take the equity financing deal.
To read the full, original article click on this link: Say No To Venture Human Capital - Bloomberg
