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Before I get started on what I wanted to discuss this week, for some great laughs and to buy a piece of computing history go here. Be sure to scroll all the way down :-)
Once it was clear that my former company MP3.com was going to have some
success and I could provide for my family, I asked myself what I could
do to improve the world. My goal in life is to leave this rock in a
better place than I found it. For guidance I flew to San Francisco to
consult with Milton Friedman. Up to that point I
had never met the Nobel Laureate economist, but I had looked up to him
since a high school economics professor played his ground-breaking PBS
series Free To Choose in class. He and his
equally brilliant wife Rose welcomed me into their condominium where I
posed the following question, "How can I make the world better?"
"Put more capital into the market," he responded. The more money in the
market, the more the economy grows and the better off people are for
the long term. He went on to stress how making more investment monies
available would be more valuable than a one-time charitable gift. Now
the question is where precisely do we need more investment money? My
answer is education.
The value of an education is undeniable, and my belief is that every
young person who has the desire and motivation to attend college should
have that option. I know from my own personal experience that I would
not have achieved the success I've enjoyed without the benefit of attending
UC San Diego. And I'm not alone. People who have attended college see their
income growth far exceed those who have not. To put it another way,
investing in education makes sense because the monies generated by
increased salary after college far exceed the fees to attend. The
challenge of course is that college
tuitions are skyrocketing,
making it difficult for many to pay for college. Most projections have
more young people attending college as our country moves toward more of a
knowledge-based society, but it's not clear where the funds will come from to pay
for it. It's obvious that state and federal government spending on
higher education will not grow substantially in the coming years.
Another source of revenue needs to be uncovered if every young person
is to have the opportunity to attend college.
Today you can invest in just about anything imaginable, from home
mortgages to cooking grease to credit card debt, but you can't invest
in education. You have probably heard people talking about "investing
in education," but that's just a euphemism for donation. It's ironic that
the one investment that virtually everyone agrees would return a nice
yield is not possible. My belief is that if investing in education were
possible, a huge inflow of monies would be made available for
education, making it practical for all to have the benefit of college.
With the help of MRU and the cooperation of UC San Diego, I
set up a non-profit foundation named REEF
to
demonstrate how education investments can work. REEF makes monies
available to students to attend college. After graduation, the students
agree to pay back a fixed percentage of their income for a set period
of time. All repayments go to fund even more students. REEF is now
funding UCSD students to attend school full-time.
Education investments make sense for students. Instead of graduating
with massive loan debts, they can graduate knowing that they have a
fixed percentage of their income to pay back. This allows them to take whatever
career path best suits them long-term, instead of taking a job just to
service a loan. (They even have the flexibility to be an entrepreneur.)
Education investments can be made available to all students - not just
the top one percent academically or athletically. At REEF, any student with at
least a 3.0 GPA is eligible. The rates depend on the amount of money
they are borrowing, their year in school, their major and other
factors.
Our hope at REEF is to demonstrate how education investments can work.
If we can successfully demonstrate the program, we expect banks and
other financial institutions to step in and begin offering funds of
their own to students at all universities. Investors will be able to invest in education
funds, just like they can with mutual
funds and bond funds. Investments would make monies available for college students.
From their future salaries, those students would pay back the original
investment plus some.
Education investments can bring equality of opportunity so that any
person, regardless of socio-economic strata, can attend a
university. The lure of the US is that it is the land of opportunity. I
think that opportunity should extend to college for everyone who
desires it. Let me know your thoughts on this idea.
-- Michael
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