Learn now, pay later

The nation's universities are now in open revolt against Maclean's magazine's annual rankings. What was once a small band of rebel institutions refusing to participate has grown to more than 20, among them some of the biggest and best-known schools in the country. The rebellion is more revealing in its own way than the rankings themselves. You'd expect the weaker schools to resist having their deficiencies catalogued. Yet in this case the ringleaders, notably the University of Toronto, consistently rate at the very top of the Maclean's tables. Welcome to the world of higher education, and the perverse incentives to which our current system of university finance gives rise. Were the University of Toronto dependent on students for the bulk of its funding, it would be trumpeting the Maclean's ranking from the highest rooftop, the better to attract more paying customers. But in fact the U of T depends mostly on government for funds. A high ranking does it no good in its eternal quest to shake more cash out of ministerial pockets, and may even do it harm: After all, the minister of education might say, it says here you're doing perfectly well as it is. Shouldn't I be putting any additional funds into institutions that, shall we say, need a little help? This sort of thing is one of the reasons university reformers have argued the need for a shift in the source of funding, placing more of the burden on students and less on the state: to make universities more attentive to students' needs and less to the state's, more concerned with quality and less with politics. As a companion reform, given concerns about accessibility, many argue for reform of student aid, from traditional student loans, with their clumsy means tests and fixed repayment schedules, to a system known as "income-contingent loans." (Such a reform would also be worthwhile on its own, as for example in the scheme recently proposed by Ken Dryden, the Liberal leadership candidate.) As the name implies, under such a scheme payments are geared to students' income over the course of their working lives. This is the proper way to measure ability to pay: not before graduation, when students' earnings are typically at the lowest point in their lifetimes, but after. Make a lot of money out of your degree, and you pay a lot back; make a little, pay a little. Indeed, as I've argued before, it shouldn't really be called a loan at all. It's more like venture capital, an equity stake in the student's "human capital." A student, on this view, might be compared to a risky startup firm: Though college and university graduates are likely to be a good risk on average -- the correlation between higher education and higher earnings is well-established -- it's hard to know how any individual's life will turn out. There's one part of this plan, however, with which I confess I've never been entirely comfortable. That's the notion of the government as venture capitalist, the provider of all those equity stakes. Sure, we want to guarantee that no student of ability is barred access to higher education, whether because his family is too poor, or for fear he will not be able to repay his student loan. But does that really require the state to act as universal underwriter? So lately I've become a convert to an idea put forward a couple of years ago by Bruce Pardy, a Queen's University law professor, in a paper for the Queen's Law Journal. Rather than require students to pay tuition fees, either out of pocket or with the help of third parties, Prof. Pardy suggests that universities themselves should sustain the up-front costs of educating their students. In return, universities would be entitled to a share of students' incomes after graduation. This implies not only a change in the way we finance students and universities, but our whole view of the relationship between them. Previous reform models see students as consumers, who purchase an education from university providers. But in fact students are themselves the product -- or more precisely, assets to be developed. In Prof. Pardy's model, the university, as an investor in the student's education, acquires a direct stake in his future career prospects. How does that matter? Under a tuition fee model, however these are financed, the university loses interest in the student more or less from the moment they're paid. Yes, they don't want to jeopardize their reputation, or to lose students part way through their degree. But there are costs to switching schools, and other ways of attracting students besides good teaching: snob appeal, scenic locales, etc. But a university whose revenues were wholly derived from students' career earnings would be devoted to ensuring students wring every ounce of benefit from their time in school, now and in the future. They would have a vested interest, not only in the quality of the education students received -- no more 800-seat lecture halls and bored, incomprehensible lecturers -- but in placing them in jobs afterwards. They would become lifelong partners in their success. As a bonus, I'm guessing there'd be no more boycotts of the Maclean's rankings.