When you think about incentive alignment, income share agreements are taking the main stage right now.
Places like Lambda School make deals with their students that they will take 17% of their salary for three years up to a certain amount if they get a high paying job after graduating.
Now someone can get a top tier computer science education without taking out loans and bearing all the risk. In this model, Lambda is incentivized to deliver an amazing experience that helps their graduates get jobs. If the grad doesn’t get a job, Lambda doesn’t get paid.
Forward thinking universities like Purdue are experimenting with similar models, and it makes a lot of sense. Higher ed is a mess when it comes to incentive alignment.
Currently, the incentives are such that universities should prefer students who take 6 years to graduate rather than 4. The school makes more money the more classes you take. They may say that they help everyone graduate on time, and obviously they would never admit to delaying people’s graduation, but the incentives are there.
At the end of said student’s 6 year undergraduate career, what incentive does the university have for them to get a job? Sure, there some metrics about job placements, but at the end of the day, whether the kid is at Goldman, working retail or unemployed, they still owe the same amount for tuition.
The more you think about it, the more broken it all seems.