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Epictetus comments on Human Capital Contracts - Less Wrong
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So here's my concern:
STEM fields have some pretty high attrition rates. At my university, for example, nearly half the engineering/physical science students fail the first year calculus sequence. Of the ones who pass, most get by with a combination of partial credit and managing to guess the teacher's password. We're talking about students who were in the A-B range in high school running into a brick wall once they hit college.
The expected income of an incoming freshman engineering student versus the expected income of a graduating engineering student are two very different numbers.
In general, there are analogues to this sort of idea of paying a portion of one's future labor instead of a fixed amount of debt. The US military runs several programs where they fund one's college education and the student has to commit to serving some 4-5 years on active duty. There are other government programs in a similar vein, where school is paid for in exchange for a some years of work. For example, there's one for teachers who agree to teach in low-income areas for a certain period.
The attrition rate is exactly the point of this. If incoming engineering students were predictably going to be rich, debt financing is the right way to go. If they are a gamble, financiers should take that risk, not the students. If they are not a gamble, because it is easy to predict which ones will succeed, then the financiers will only finance the likely ones and the others will switch fields without wasting a year of their lives.
Yup, I agree. Incoming freshmen who said they wanted to do engineering might get a slight discount - only a year or two in, once they've passed some courses and actually declared would they get the full discount. I figure this is the sort of thing the market is capable of pricing in.