Funding higher education through a free-market ‘graduate tax’
Peter Ainsworth makes the case for a completely different system of financing higher education, namely one which aligns the incentives of all stakeholders are properly. Under a ‘free-market graduate tax’, universities would effectively become equity holders in human capital. They would be entitled to a share of each former student’s earnings, thus earning a return on the human capital they helped to create, in the same way in which shareholders earn a return on physical capital. This would fundamentally change incentives. Universities would become much more interested in ensuring their alumni possess valuable skills, and are able to put them to good use.
In this video, Peter Ainsworth outlines his alternative model, which he also explains in greater detail in the Discussion Paper ‘Universities challenged: funding higher education through a free-market ‘graduate tax’’