OAC Archive: Big Idea: Tertiary Education Contribution System … TECS

Archive post from OAC blog, shutting down today

BruceMcF in Arguments & Analyses Feed of

8/17/2006 at 9:24 AM EST

(Original picture: Graduation at Maysville Community and Technical College,

no idea where this one is from)

There are two sides to public funding of tertiary education. One is education as a requirement for career opportunities. To the extent that education is required for entry into “good” careers, then our American ideals demand public funding of those without the means to go proceed with tertiary education on their own. Otherwise higher education becomes a means of establishing a permanent class system, and ends the dream of a land of opportunity.

This diary is not about that aspect of public funding to tertiary education. It is about the other aspect: education as a tool of economic development.

I am proposing a system here to identify skills that we need to develop sustainable competitive advantages, and then to help fund the education of most qualified candidates for those programs.

When I refer to it as the Tertiary Education Contribution System, I am making three references. First is a reference to the Australian HECS (H is for Higher) system, from which I borrow freely (but not entirely). Second is a reference to the Student Contribution portion of the program. Third is a reference to the Contribution that the successful students will make to their Nation’s Economic Independence.

Step One: Identify University and other Tertiary Places that the Program wishes to Purchase

The federal competitiveness program identifies a certain number of positions that it is will to buy from Universities and Technical Schools.

It establishes the amount it is willing to pay for each position, which is an amount that is able to cover the cost of that training somewhere in the country. Obviously if someone wants to pursue such a position at Harvard, or someone wishes to pursue such a position at a state-subsidized institution in another state, the full cost of the program might not be covered.

If you wish to compare this to a system where individual Universities get to decide how much funding they are going to receive, be my guest. I am going to compare it against the present scenario.

Step Two: Merit Criteria

The federal competitiveness program establishes merit criteria for competing for one of these places. A place is awarded strictly on the basis of merit measured against the criteria.

Step Three: Best Qualified Students are Funded

Students that apply for a University place and also win one of those places have the TECS grant paid directly to the school, and only owe the balance to the University.

Now, a portion of the Federal funding is required to be paid back as a Student Contribution, over time, after cessation of study. Unlike student loans, this Student Contribution is completely interest free. It is paid as part of the income tax process on a sliding scale.

However, if the student wishes they may pay the Student Contribution up front, receiving a discount on their Student Contribution.

Now, I know what you clever folks will say, “but the federal subsidy is effectively higher if they do not get a highly paid job”.

Well, yeah, of course. The student contribution recognizes that inside the contribution to the economic competitiveness of the nation’s economy is also a contribution to the career of the student. By having an amount to pay as an interest free loan, on a sliding scale based on income, then if the student goes on and hits the career jackpot, they in effect pay a larger share, and if they do not, they in effect pay a smaller share. That is only fair.

Indeed, the student that wishes to pay off the Student Contibution up front should be allowed to do so, with a 25% discount (reflecting the difference in financial value between being paid up front and being paid down the track).

And that’s about it

As to the question of “how much should be allocated” … well, the more that is allocated, the more places we can buy.

I would like to see the funding in terms of courses of study. Then if there is attrition, the funds not spent on that course of study go back into the pool. Student Contribution payments received also go into the pool. This gives the people running the system a strong incentive to avoid “four year degree or nothing” syndrome … that is, with the Student Contributions acting as top-up funding, there is an incentive to look for promising two-year programs to fund that will lead to a quicker payback.