Category Archives: Higher Education

An Idea for a Pay for Success / Social Impact Bond


I’ve been in New Orleans all week, which is always great.

On Friday, I got some time with Stephen Rosenthal, my former board chair at NSNO.

He made the following argument:

  1. We spend ~150K to educate a child K-12.
  2. Then we send many of these children to college, where many of them drop out.
  3. Groups like KIPP to College and POSSE are demonstrating that spending another ~5K per kid can significantly increase the odds that a student will graduate from college.
  4. Right now, there isn’t much public funding for these programs.

He makes a good point: would you rather spend ~150K and have a ~10% chance of getting a student in poverty through college or ~155K and have a ~30% chance of getting a student in poverty through college?

While the numbers may not be exact, you get the idea.

So why not create a pay for success / social impact bond program?

Many cities and states have “promise” scholarships that guarantee free or near free in-state tuition for qualifying students.

Why not allocate a portion of these funds to providers who are only paid for each marginal student in their program who graduates college above baseline completion rates?

A provider could then raise debt based on an investor’s belief that the provider will help students through college.

If the provider works, it receives money from the government, the debt is paid off, and college completion rates go up.

If the provider fails, tax payers lose nothing.


3 Ways of Understanding American Universities


Pinker, Arum & Roksa, Caplan 

Steven Pinker

“Ivy admissions policies force teenagers and their mothers into a potlatch of conspicuous leisure and virtue. The winners go to an exorbitant summer camp, most of them indifferent to the outstanding facilities of scholarship and research that are bundled with it. They can afford this insouciance because the piece of paper they leave with serves as a quarter-million-dollar IQ and Marshmallow test. The self-fulfilling aura of prestige ensures that companies will overlook better qualified graduates of store-brand schools. And the size of the jackpot means that it’s rational for families to play this irrational game.”

“We have already seen that test scores, as far up the upper tail as you can go, predict a vast range of intellectual, practical, and artistic accomplishments.”

Arum and Roksa

“Even after statistically controlling for students’ sociodemographic characteristics, college majors and college selectivity, those who finished school with high C.L.A. scores were significantly less likely to be unemployed than those who had low C.L.A. scores.”

Bryan Caplan

“The main reason why college is a good deal for good students, a mediocre deal for mediocre students, and a poor deal for poor students: good students usually finish college, mediocre students usually don’t, and poor students almost never do. And most of the payoff for college comes from finishing.”


  1. There appear to be tests that can reasonably measure who will succeed in college.
  2. There appear to be tests that can reasonably measure how well college graduates are prepared for the workforce.
  3. The information from these tests is consistently ignored by families, students, and employers.
  4. Non-profit universities make collect money when students attend college and either (a) learn little and / or (b) drop out.

If I were in alien, I might ask the question: what the f*** is going on?

As a human, I understand that optimism bias, status seeking, and greed can wreak havoc on our species. 

I hope that, overtime, using data will allow us to better prepare students for college, increase the percentage of students that actually learn something at college, and help our society allocate funds more equitably and efficiently in supporting the pursuit of higher education. 

I’m unsure if this will occur. 

What Would Make Higher Education Better?


There is a good article in the Atlantic on Minerva, a new type of university. If you don’t have time to read it, I’ve pasted excerpts at the bottom of this post, which will give you the gist.

When I think about what would make higher education better, here’s a list that comes to mind:

  1. Students will learn more because of better instruction and higher accountability. Right now many colleges are basically an entrance exam + a four year long test of conscientiousness (do you go to class and study enough to not make an ass of yourself on an exam or paper?). This could improve if the incentives changed (probably by new entrants into the market forcing the issue). 
  2. College will be cheaper. Because the college premium is real, from an individual’s perspective, so long as you graduate, college is a very good deal. However, there seems to be much wasting of resources, which taxpayers subsidize. A lower cost would be beneficial.
  3. Quality will scale. Yes, top universities in the United States are pretty good – but how difficult is to produce some value when you cluster students and professsors with extreme intelligence on one campus? Not very. I am eager to see quality increase in the universities ranked 100-700.
  4. Consumption and social practice will continue. College is not just about academic learning, it’s also about consumption (having some fun) and social practice (navigating the emotional world). These things should continue, though perhaps with reduced emphasis. In hindsight, I spent too much time on consumption during my college days, which I really do regret (I thought it would make me happier than it did, though perhaps there’s only one way to learn that lesson).
  5. The tension between status and weirdness will decrease. Right now, families know they are buying a credential. This makes it potentially very risky to go to a university such as Minerva, which is “weird” (though Minerva is doing everything they can to brand themselves as high status). I think we will see much more diversity in university types once a few different types break into the mainstream.

In considering these factors, Minerva seems like a welcome addition.

What do you think would make higher education better? Drop a note in the comments.

Also, HT to Bryan Caplan for raising many of these issues over the past (though I’m not sure he’d fully agree with my take).

Here’s the excerpts:

Bonabeau led the class like a benevolent dictator, subjecting us to pop quizzes, cold calls, and pedagogical tactics that during an in-the-flesh seminar would have taken precious minutes of class time to arrange.

The pedagogical best practices Kosslyn has identified have been programmed into the Minerva platform so that they are easy for professors to apply. They are not only easy, in fact, but also compulsory, and professors will be trained intensively in how to use the platform.

Nelson’s long-term goal for Minerva is to radically remake one of the most sclerotic sectors of the U.S. economy, one so shielded from the need for improvement that its biggest innovation in the past 30 years has been to double its costs and hire more administrators at higher salaries.

The other taboo Nelson ignores is acknowledgment of profit motive. “As if nonprofits aren’t money-driven!” he howled. “They’re just corporations that dodge their taxes.”

One possibility is that Minerva will fail because a college degree, for all the high-minded talk of liberal education— of lighting fires and raising thoughtful citizens—is really just a credential.