Investing in Human Capital
A Capital Markets Approach to Student Funding

This 2004 book examines how 'human capital contracts' transfer financial risk of higher education from students to investors.

Miguel Palacios Lleras (Author), Nicholas Barr (Foreword by)

9780521039529, Cambridge University Press

Paperback / softback, published 16 August 2007

252 pages, 22 b/w illus. 24 tables
22.5 x 15.3 x 1.5 cm, 0.383 kg

'Little can be more important to the welfare of our civilization than finding ways to match educational opportunities to human capability. Too often, human resources are squandered by failure to make these opportunities available to deserving but poorly financed individuals. Investing in Human Capital describes an exciting remedy: equity investments in the fruits of educational investment. Although this idea is not new, it is virtually untried and this book more than any other shows in detail how to turn it into a successful reality.' Mark Rubinstein, Haas School of Business, University of California, Berkeley

Most higher education finance literature assumes that students cannot pledge their future earnings to finance their education in a free society. Investing in Human Capital, first published in 2004, challenges that assumption and explores human capital contracts as an alternative mechanism for financing higher education. Investing in Human Capital tracks the roots of the idea behind human capital contracts, discusses the beneficial consequences they would have on students and on higher education markets, and describes how they can develop in light of the innovations that have taken place in financial markets during the last decades. The book also explores the challenges - ethical and financial - that such instruments face and offers implementation alternatives that can bring about their existence in the context of a national higher education financing programme.

List of figures
List of tables
Foreword
Acknowledgements
Introduction
Part I. The Problem of Financing Education: 1. The value of education
2. Market failure in the financing of education
3. The need for alternatives to traditional funding
Part II. Equity-Like Investments to Finance Education: 4. The evolution of human capital contracts
5. How human capital contracts work
6. The case for human capital contracts
7. Human capital options
Part III. Implementing Human Capital Contracts: 8. Hurdles in the implementation of human capital contracts
9. Lessons from the implementation of income-contingent loans
10. Government-driven implementation of human capital contracts
11. Conclusion
Appendices
Notes
References
Index.

Subject Areas: Public finance [KFFD], Finance & accounting [KF], Higher & further education, tertiary education [JNM], Funding of education & student finance [JNKG]