The third innovation of Michael Robertson

To meet the ever growing need for skilled and qualified professionals, more incentives need to be given to enable students to pay for higher education. Dr Anil Seth says that Michael Robertson’s foundation has adopted an innovative approach to education by considering education as an investment and not an expense

Even if one has not heard of Michael Robertson, it is hard to have missed MP3.com. Inspite of controversies surrounding MP3.com, it will always have an undeniable contribution on the way music is distributed and sold. After selling that firm, Michael Robertson went on to form Lindows.com. The first reaction to Lindows was incredulous—it reminded me of Don Quixote and the windmills. As Lindows is about to release version 4 of their Linux software, it appears as if Lindows may indeed be fulfilling a need. However, this article is not about either of these two creations. It is about a third innovation which did not attract much publicity. It changed my perspective about higher education.

Michael Robertson graduated from the University of California, San Diego. The Robertson Education Empowerment Foundation (www.aboutreef.org) floated by him has created a very different method of funding the education of students. An obvious motivation has been the fact that many students have gone bankrupt, unable to repay loans they took for their studies. The Foundation looks at education as an investment. Any investment has risks and rewards. Students receiving grants agree to pay a part of their earnings after they graduate. The quantum of payment and the duration depend on the amount of grant they have taken, which typically ranges from 1-3 percent of their future income being paid back to the Foundation for a 10 to 15-year period. This is being done in collaboration with ‘My Rich Uncle’.

This is a remarkably simple idea but it has very powerful consequences. The implications of the idea were brought home to me by a friend, who was worried about the downturn in the technology sector. He said that other than his small house, all his investments went into paying for his son’s engineering education. Sometime later, I came across the story of another family who had taken loans to send their son abroad for studies. The IT market crashed, their son was back and parents were saddled with a massive loan. Repayment of foreign study loans on Indian salaries is unthinkable.

It is evident that students and parents do look at education as an investment. Unfortunately, in many cases, they are neither equipped to take a informed decision about the future nor able to handle the downside of the economy. Higher education costs money. There is no way that we should compromise on that. We need to look at ways in which it can be funded and the beneficiaries. The first obvious beneficiary is the student. If he can manage to pay his way, he will. Society, however, needs to be concerned about people who cannot. Our current system of so-called ‘free seats’ and ‘paid seats’ leaves a lot to be desired. The concept of merit is restricted to the marks scored, regardless of the environment in which the student has studied. There is also a lot of pressure on the government to stop subsidising higher education and focus on primary education.

If we pause to think a little about it, the biggest beneficiary is the government! Educated people earn more, hence they pay more taxes. The obvious conclusion is that government should fund higher education in its own long-term interest. It is also best equipped to handle risks of economic ups-and-downs. The tuition fees of even government institutions should be based on real costs.

The government can, like Robertson’s foundation, give grants in return for students agreeing to pay a percentage of their future earnings, regardless of where they are. One of the criticisms of IITs and IIMs is that students of these institutions go abroad. With the above model, government should be happier because they will be repaying in dollars.

This model is also consistent with a person deciding to forego a high paying salary and deciding to work in a village. He is not burdened with the task of repaying a loan. Society certainly needs such people.

It is not just the government which should adopt this model. Even privately promoted educational institutions can implement a similar scheme to ensure that they are able to attract good students who are not in a position to pay the fees. An article reported that Yale University had introduced a deferred tuition fee program, which became redundant when the US government introduced low interest loans for education. Soft loans, however, are drying up in recent years.

Another fascinating aspect of the above model is that expected earnings of a person studying from an IIT are much higher than a person pursuing a bachelor’s degree in Science at a local college. Hence, although the cost of education in IIT will be much higher than in a local college, the percent of salary and time period committed for education may not be very different. An institution, public or private, which implements such a scheme of funding in a significant size, will directly benefit from the quality of education the institution provides—better the education, more their alumni will earn and more they will repay. The cycle of of quality improvement appears to be self-sustaining provided educational institutions are motivated by long-term, education-directed goals.

In summary, we need to look at funding higher education from a different perspective. The current system has failed to look at pressures of admissions, the availability of seats and the financial constraints in which universities find themselves. The future of our country will depend upon the quality and quantity of education we impart. Any model implemented should consciously ensure that even those without money have an equal chance of learning and improving their quality of life. The government must also realise that its future earnings will depend on the quality and quantity of professionals the society is able to produce. This is particularly true of the information tchnology industry, which has truly changed the rules for enterpreneurs, given a chance to numerous people for improving their lifestyle by an order of magnitude—regardless of their family background, connections, caste considerations, etc. It stands out as an illustrious example of merit and competence being critical to success. It has provided new role models who are worthy of a healthy, dynamic society; but we need even more.

Dr Anil Seth is currently with the PC College of Engineering in Verna, Goa. He has a keen interest in open-source software and the free software movement, on which he also offers consulting. He can be contacted at anilseth@goatelecom.com