Monday I wrote about a proposal in the State of Oregon to adopt an investment-style model for financing college costs at Oregon’s public universities that would allow students to attend with no up-front cost, but would require students to commit to paying a percentage of their future earnings over a number of years. In that post I highlight some concerns about how such a program would/should be structured, but don’t confuse that with thinking the program is a bad idea. In fact, it’s a proven concept–at least when the people running it have a strong incentive to make sure it works.
There is actually at least one for-profit business that provides exactly the kind of college investment funding that the Oregon proposal considers…and it has been operating for over a decade.The company (Lumni) was highlighted in a May 2011 New York Times op-ed along with a follow-up piece. Moreover, Lumni has thus far proven a financial success for students and for investors (yes, it’s an actual investment company), despite the fact that it focused primarily on investments in Latin America, where one might expect it to be more difficult to enforce long-term investment contracts, particularly of the “venture capital” type. Lumni now also offers contracts in the US.
I am not endorsing Lumni and I would caution anyone to do their homework before entering into such a contract with any company, but the longevity of the company suggests that such an investment model for college costs is not only viable, but viable for the private sector. Which may beg the question of whether a State or its universities should be trying to manage such an investment operation themselves.