Thursday, February 19, 2009

Crackpot Idea #237

MBA programs should charge a percentage of your future earnings instead of tuition.

Granted, there would have to be a "Dean of Collections" with a team of thugs in case you don't pay -- "This one's from CMU <wham!>" But look at it this way: (1) universities would then have a major incentive to make you rich, and (2) anybody could afford to get an MBA.


  1. Not so crackpot... Once saw a patent on a tuition investment fund... people paid into the fund which would "invest" in student tuition in return for percent of future earnings (presumably the amount invest depended on student/school/major).

  2. There were a bunch of these, including the recently failed MyRichUncle.

  3. Ah, but see, if the universities were in on it, the incentives would align better: it would be in their best interest to educate you so that you get rich :)

  4. I'd been day-dreaming about this, but on a far more massive scale. Lots of developing countries have their brightest minds emigrate to first-world countries.

    Viewed one way, this is a subsidy of the rich countries by the poor. It also disincentivizes poor countries from investing heavily in education.

    If people had to pay a percentage of their earnings as taxes to the government that educated them then a brain drain isn't as crippling for developing countries.

  5. I have to disagree about that last point. As somebody from a developing country who came to the first world, I strongly believe it is best for these "brightest minds" to leave their countries -- at least to get an education. (A) Looking at it from the individual's point of view, there is no comparison: going to the first world maximizes your chances of success by orders of magnitude. (B) Looking at it from the point of view of humanity as a whole, it's best if the brightest minds get the best education -- had they stayed behind, some great innovation may have never happened. (C) Even looking at it from the point of view of the developing countries, if these brightest minds stay behind, they likely get stuck in a job that they are overqualified for; whereas if they leave, they get a good education and have a chance (albeit small) of coming back better than they were. The ones that come back are usually the ones innovating in the developing countries, since they have been exposed to more ideas from the first world.

  6. Developing countries already have programs aimed at talking advantage of western education while at the same time reducing brain drain. For example, my friend from Thailand has her education fully funded by Thai government. In return, she has to work in Thailand for c * x, where c is some constant (four I think) and x is the number of years she spends in the states.

    With regard to realigning interests for MBAs, I had a similar idea. It's a communal trust for statups. So, in grad school everyone has a crazy startup idea, and no matter how good they are there is some amount of luck involved to succeed. As a group of students, it might be in your best interest pursue a few ideas in parallel. Each student would have a stake in each company, and if one of the companies is super successful then everyone wins.

  7. "The ones that come back are usually the ones innovating in the developing countries, since they have been exposed to more ideas from the first world."
    Again a sweeping statement. Indian and chinese nuclear program were developed fully in the respective countries only by phds graduating from their own country. Just try to expand your horizon outside cs (still not sure if every innovating person has a phd from us) and you will see majority of indigenous people are doing very good.

  8. Dear Anonymous:

    If you notice, I used the word "usually," and I still stand by my statement.

    You said: "Indian and chinese nuclear program [sic] were developed fully in the respective countries only by phds graduating from their own country."

    That's just false. For example, from the New York Times:

    "Deng Jiaxian, a physicist educated in the United Sates who was instrumental in developing China's atomic and hydrogen bombs, has died of cancer, the official New China News Agency reported Sunday. He was 62 years old."

    I also would not consider India and China prime examples of the third world. Both of these countries now have pretty good university systems (*and* nuclear programs!). I was referring more to countries where you can't even get an undergraduate degree in scientific disciplines.

  9. Even if everybody could afford it the university would be afraid to admit anybody they didn't think could make money later. Instead the university might resort to tricking business hot-shots that are going to make a lot of money anyway to come to their program without offering anything at value.

  10. This is a good point, and that's why I restricted my idea to MBA programs and not other disciplines :)

  11. Your suggestion is actually very similar to the tuition model of Franklin Olin ( No students pay any tuition, but they are strongly encouraged to give significantly once they are successful alumni. You could say "Well, every university strongly encourages their alumni to give," but I've met some Oliners, and the idea of giving back seems much more well-entrenched in their psyches than it does in the psyches of graduates from other colleges.

  12. Don't agree with this one Luis - here are a couple of negative outcomes:
    1) Ethics education (don't laugh, it does exists in MBA programs) would be minimal at best as schools would try to maximize unethical behavior in favor of getting their students to make more money
    2) Schools would be less likely to admit "do-gooders", people who want an MBA education but plan to work for non-profit/gov't. Instead they would accept every person who wants to be an investment banker (or these days, hedge fund/PE person)