Priya Patel
The corporatization of academia and the massive federal student loan program have led to a broken higher education system in the United States, according to Jill Jacobson, a third-year law student at Boston College Law School. She proposes a different way to finance higher education: through equity.
- Universities are now corporations focused on profit rather than nonprofit institutions dedicated to higher learning, leaving many graduates with lifelong debt and inadequate job prospects.
- The federal student loan program enables universities to prioritize their own financial gain over the quality of their education.
- According to Jacobson, the ideal way to finance higher education is through income share agreements (ISAs), which function like contracts in equity. Students finance their education by selling a stake in their future income, and investors’ returns are tied to the students’ professional success.
- University-provided ISAs would incentivize institutions to combat tuition inflation and bureaucratic bloat, as their financial success would be tied to the success of their graduates in the job market.
- ISAs would also relieve the federal government and taxpayers from subsidizing the student loan market, which has already cost the country over $197 billion.
Jacobson argues that by implementing ISAs, universities would better align their incentives with the needs of their students, encouraging a focus on tangible skills and employability rather than trivial social issues. Additionally, ISAs could be structured to support students pursuing degrees that may not guarantee high incomes, using cross-subsidization by high-earners to ensure a safety net for those in liberal arts careers.
