Paying for Education I am a professor at Augusta State University (ASU). I teach my classes, give tests, and award grades based on performance. The best students get an "A," the next best a "B," and so on. The worst get an "F," of course. Almost always I find that performance is not so much correlated with intellectual ability but with attitude. Not infrequently, I can take a "C" or "D" student, and, at considerable cost of time, have a good, long talk or two with him or her, instill an attitude change and get the student to perform at an "A" or "B" level. I wish I had a simpler, less costly, mechanism to induce students to work harder and to perform better, i.e., to change their attitude. Here is one idea. Suppose I offered a payment. Instead of giving an "A," I would give $400. Instead of a "B," I'd give $300, $200 instead of a "C," $100 instead of a "D," and $0 of course to replace an "F." Instead of grade-point averages, student transcripts would show total dollars earned. At 5 classes per semester, instead of a 4.0 GPA, an all-"A"s student could earn $2,000, enough to recover tuition and textbook costs at Augusta State University. Even a "B" student would, at 5 times $300, recover just about all costs. Professor, you might say, have you been hiding in your ivory-tower yet again? Haven't you heard of Georgia's HOPE scholarship program? Isn't the idea that if a student maintains a "B" average, s/he gets a tuition-waiver and some book-money? Isn't that a payment for grades? Professor? Yes, I did hear of it. The program idea is correct, but the program design is wrong for economics teaches otherwise. There is, after all, a reason why ASU pays me at the end of the month, not at the beginning. I have to perform first, and then I get my reward. I have to lay out my living expenses for a whole month before money comes back into the Brauer household till. Not only do we need to put the carrot in front of the donkey instead of behind its ... well, its behind ... we also need to offer something other than an all-or-nothing option. Suppose at year's end there is an all-or-nothing merit salary increase available to me. If I perform in the "A" and "B" league, I get the pot-of-gold increase, but if I perform in the "C," "D," or "F" league, I only get the pot. With this incentive system, people will tend to shoot at "B" and "F" performance! Why should I perform at an "A" level, if my reward is no greater than a "B" performer? Others will perform at an "F" level since their reward (nothing) is no worse than those who struggle and turn out to be "C" performers, who also get nothing. (In practice, they perform at the "D" level because with an "F" average they get suspended from college.) In other words, we do what needs doing to get by. The system encourages mediocrity, instead of eliciting each person's best-effort performance. Whoa, wait a minute I hear you cry. If we offer a $100 for a "D," don't we provide an incentive for people to keep seats warm? No, not at all. My scheme is a reimbursement scheme. Students have to pay tuition first. Suppose the costs per class runs at $300 and you get only $100 back, why that sounds like a bad deal, doesn't it? "D" students are likely to drop out or spruce up! To make the whole system work even better, I myself would like to collect on the first day of class, $300 from each student (cash, money order, cashier's checks only). If you pay, you get a seat in the classroom. Conversely, on the last day of class I myself would like to give my students their pay-off: $400 for "A" students, $300 for "B" students, and so on. I have two hunches: first, on average students will perform better; and second, gazillions of bureaucrats will bury the whole idea. But I have mischievous mind: let's by-pass the bureaucrats. After all, there are, even in our town, private employers who pay students to go to college. What if these employers started to reimburse college costs based on performance and made credible future employment commitments to these students, also based on performance? What if parents did? "Yes, son," I'd say, "you advance the cost for your own betterment and for every ‘A' I will reimburse you $400." Provide the proper incentive and behavior (attitudes) will change, wherefore performance would more nearly match a student's inherent ability. Average student performance would increase. There is one additional benefit: since for every dollar students pay, tax-payers put in about another $3 to finance the cost of running state colleges, my scheme would increase the tax-payer's return on educational investment. Dr. J. Brauer is Professor of Economics at Augusta State University's College of Business Administration. He can best be reached via his web site (http://www.aug.edu/~sbajmb).