Open Student Finance for the Guitar Hero Generation

I was fortunate enough to have been invited to speak at the OpenEd09 conference which took place last week in Vancouver. While my favorite part of attending the conference was meeting lots new people - many of whom I was already familiar with through their published work - I also enjoyed the chance to share my own ideas and get feedback.

The gist of my talk was simple: something magical happens when the feedback cycle is shortened. As I say in my talk, it wouldn’t be much fun if videogames took an hour, or even a minute to return feedback about your performance. The fun starts to manifest once the feedback is instantaneous.

This observation, I believe, is important in light of concerning student debt numbers - 67% of American students graduate with debt, and the average debt level is over $23,000. The problem isn’t as bad in Canada and Europe where there is more public support for universities, but even in these places there is clearly a trend of increasing debt levels.

Why do students accumulate so much debt? I believe it’s in part because the student finance process is slow and monolithic in a time when we are increasingly growing accustomed to fast, multi-threaded communication. In other words, we’re using a snail mail method of financing students in the age of the tweet.

To better prepare student finance for the “Guitar Hero Generation” of students, I present the idea of a virtual piggy bank which can be filled with funding in many small increments, with as little lag time as possible between evaluation of student performance and the feedback about how that performance affects a student’s funding.

In particular, I highlight three prerequisite changes that must be made for this setup to work:

• Ubiquitious Evaluation - Feedback about how a student’s performance affects their funding can only be given as fast as data is collected in the first place through evaluation. This means that contrary to the popular idea that students should be evaluated less, they should actually be evaluated more. A positive side effect of this would be reducing the misalignment of incentives that tends to form when the evaluations are minimal enough as to be conspicuous. Students would not be tempted to beg teachers for a changed grade or study the meta-art of test taking if the evaluation and grading were ubiquitous enough as to be fully integrated into the learning process.

• Smaller Award Size & Greater Number of Awards - Right now, the minimum size of scholarships, grants, and loans is in the thousands of dollars. The new paradigm of student finance requires these monolithic awards to be broken down into much smaller sizes, in a much greater quantity.

• Greater Variety of Funding - The friends and family of a student may not be able to pledge $10,000 toward a pay-for-performance fund, or even $1,000, but as the award sizes decrease, it becomes more feasible for the economics of microfinance to affect how students raise their education funds, collecting many pledges in tiny increments.

I also confront the issue of paying students with cash. There have been pilot programs where students have been awarded for grades with cash money, and some early experiments with crowdsourced student funding for student funding - like Gradefund and Ultrinsic - give students cash, and have no way of assuring that this cash is spent on educational uses.

Ultimately, paying students for performance with cash isn’t a sustainable model. It will be necessary to use a domain-specific currency, so that students can earn money that can only be spent in educational contexts. As a few people suggested to me after the talk, this would most likely have to begin on a small scale, perhaps with a single university or coalition of universities accepting (and offering) such an education-specific currency.

I also touch on the seeds of the new student finance paradigm, such as PayPal’s new student banking program that got a writeup in the Wall Street Journal the day of my talk.

It was a real pleasure to present these ideas and get constructive criticism about implementing them. I’m more convinced than ever before that we’re in the midst of an educational paradigm shift, and it’s about as exciting a field as possible to be working in right now.