In the course of his fall economic statement, the provincial Finance minister, Ernie Eves, casually announced that Ontario colleges and universities will be allowed to raise tuition fees for most undergraduate programs by as much as 20 per cent over the next two years. And, perhaps more telling of future trends, tuition fees will be completely deregulated for graduate and professional programs, and for other courses, like animation, where graduates are in particularly high demand.

As significant as they are, these measures should be kept in perspective.

Fees have already risen sharply in recent years, 30 per cent under the Tories, 20 per cent under their NDP predecessor. Ontario now has the second- highest tuition fees of any province, while offering its universities the rock- bottom lowest per student grants in the country. Yet even now, students still pay less than a quarter of the total cost of their education. If full-cost recovery is the Tory government's goal, fees have a long way yet to rise.

So the real incendiary device in the package, the one that will make a market in post-secondary education a reality, was the government's confirmation that it intends to put a radically reformed student aid plan in place by the start of the next academic year. The new scheme relies on what are usually called "income-contingent loans." But in reality, they aren't loans at all.

They much more closely resemble venture capital.

The distinguishing feature of a loan, after all, is that it must be paid back in a regular series of equal installments. The risk, in other words, is borne by the borrower: if you don't have enough income to make the payment in any given month, that's just too bad. That's why firms with particularly uncertain or unstable cash-flows -- high-tech startups, for example -- typically avoid borrowing to finance their investments. Instead, they issue equity. Here, the risk is shifted onto the shareholder: rather than a stream of equal payments, the firm agrees to repay the investment as a percentage of its income in future years.

That's exactly how an income-contingent loan scheme works. Under the current Canada Student Loan Program, a student might graduate with very uncertain prospects and a $25,000 debt load on his back.

That's what makes the prospect of higher fees so terrifying to so many students, who cannot be sure how they will fare in the job market. Even though the statistics show that those with post-secondary education have much lower unemployment rates and earn substantially more, on average, than those without, many students would be unwilling to take on so much debt if there were even a chance that they might become unemployed.

But under an income-contingent system, it is the government that assumes the risk. As the name implies, the payment you are required to make in any given period varies with your income. If you earn nothing, you pay nothing.

If you earn a lot, you pay a lot. In place of the present tortuous process of assessing "need" in advance, a student's income would enter the equation only later, as a measure of his ability to pay.

Such a scheme would make it possible to charge the full cost of education to students. Payments could be collected over many years through the income tax system, just like a tax. Only instead of taxpayers in general footing the bill, the system would be financed by those who benefit most from it.

In effect, the government would have formed a joint venture with you, in your future. The government arranges the seed money up-front, since at that stage in your life you probably won't have the cash on hand to pay for your education. But it, and you, can have a fair degree of confidence that over your lifetime, the investment will be worth it. And even if you turn out to be a bust, the government can spread its risk over a large pool of students.

That's why I say it should not really be called a student loan. Call it student equity. By staking you the cost of tuition, the government is making an equity investment in your "human capital." That still leaves you as the major investor, since the biggest cost of going to university to the student is not the fees, but the income that is forgone over those four years when you could have been working.

Which is one of the best reasons to take the subsidy out of tuition fees. If the biggest part of public funds for universities are allocated, not by government granting agencies, but by students, who must themselves repay the state's investment in them, institutions will have a strong incentive to find ways to reduce the cost of education. And one of the best ways is just to take less time dawdling about it.