Count on governments to implement perverse counter-productive incentives in the name of niceness and compassion. In Britain People who graduate from college into higher paying jobs will pay higher interest rates on their college debts. This is exactly the opposite of what the incentives should be.
Successful graduates will be penalised most by the introduction of variable interest rates on the loans they take out to pay the fees. A university leaver with debts of £30,000 and an annual salary of £45,000 will have to pay back about £2,160 a year for about 30 years. Someone earning £25,000 will have to pay £360 a year for the same debts because a lower interest rate will be applied. "Middle earning graduates will pay a lot more for their degrees over their lifetimes, and that will worry people," said Ian Mulheirn of the Social Market Foundation think tank. "They will face significant debt for the first time."
Imagine the opposite incentives were put into place. Imagine that the higher your income after college the lower your college debt interest rates. What would that do? Lower interest rates for higher earners would incentivize students to aim at higher paying jobs that produce more wealth.
Think about it. Students should be steered toward jobs where they will less likely to suck at the public teat and where they'll be more likely to earn more and pay more in taxes. The higher earners generate the wealth and tax revenue that fund education. We already benefit from their higher tax payments. Therefore we should encourage more people to make training and career choices that will make them higher earners.
Update: Want to make a country richer? Eliminate government funding for academic departments whose graduates make the least amount of money. Take the bottom 20 departments and make them totally tuition funded. The greater good would be served by steering people into learning skills that enhance their productivity.
Students who want to study art history or ethnic grievance studies who can't afford to pay the full freight for bricks-and-mortar colleges will still be able to learn economically useless information in online courses. Why waste taxpayer money people people attain lower middle class living standards?
|Share |||By Randall Parker at 2010 November 05 09:09 PM Education Incentives|