College works to eliminate student debt
Trinity College, in Chicago, is making unprecedented progress in creating a system of funding higher education that does not leave students burdened with tens of thousands of debt that, unlike business or personal debt, can not be eliminated by taking bankruptcy.
The faculty has realized that their salaries are being paid by students through burdensome student loans over 15 or more years, and they want to change the system. Spearheaded by college president Aaron Kuecker, along with Cote Soerens, they are doing it through lowering tuition and becoming an urban work college, with the students employed by local businesses, along with some clever financial engineering
From what the student debt activists groups tell them Trinity is one of only a handful or college committed to eliminating the problem, rather than simply mitigating or reducing its burden down stream. This is an institutional innovation that has picked the right leverage point to transform the system with a replicable model. We are going to feature their work at our Neighborhood Economics conference in San Antonio in February.
Trinity has reduced its tuition by 40%, and has become an “urban work college” with the students paying off part of their tuition through working with local businesses. Because of some of that financial engineering, they and colleges who emulate them will actually see an increase in tuition revenue, despite the lowered fees. Trinity has been creative in having the wages paid as tax-free tuition grants. That eliminates most of the tuition debt burden, but it doesn’t leave the students with spending money, so there is more work to do.
We are helping them figure it out, most often bringing in the right person from our network to move the project forward. We think part of the comprehensive solution will be to create a micro economy with the participating businesses, and let the businesses and the students get compensated for the collective economic and social value created; or to put it another way, get paid for the system change. And we have a hunch that calculating the increase in collective social capital in that place, the reciprocity and measurable increase in economic justice along with increased tuition revenue can possibly fill the gap.
As Cort Gross, a creative financial engineer suggested,
“We need a market that buys and sells social equity. Some instrument — like treasury bills — that we can look at, something against which we can peg this instrument we’re talking about. Without it, we just have to assert value as a thing in itself.
“Call it Trinity bucks — halo? Wings? You need a local business person saying my $5000 investment in this student has generated $20,000 in return. And document that somehow. A kind of golden ticket. Speaking of numbers, adding that kind of “ooch” is what could make a deal pencil. It’s a little bit sunshine and unicorns, but if your market is smaller dollar social investors, in a sense, they have already drunk the Kool-Aid. You are just offering them another product — and it is in the sexy and growing educational space.”
We agree with Cort if you are going to do a real time accounting and try to balance the contributions on both sides of the labor and management equation a currency could be the answer.
It may be that an internal micro economy’s local currency is the answer to fairly describe the value of labor while also compensating visionary B Corps plus local with justice businesses who will be the pioneers AND give students money to buy beer on the weekend.
