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Today 14 million Americans are indebted
for their passage to the new economy.
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Too poor to pay their way through college,
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they now owe lenders more
than one trillion US dollars.
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They do find what jobs they can get
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to pay off a debt that is secured
on their person.
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In America,
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even a bankrupt gambler
gets a second chance ...
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but it is nearly impossible
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for an American to get discharged
from student loan debts.
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Once upon a time,
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in America,
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going to college did not mean
graduating with debt.
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My friend Paul's father graduated
from Colorado State University
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on the GI Bill.
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For his generation,
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higher education was free or almost free
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because it was thought of
as a public good.
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Not anymore.
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When Paul also graduated
from Colorado State University,
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he paid for his English degree
by working part time.
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30 years ago,
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higher education tuition was affordable,
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reasonable,
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and what debts you accumulated
you paid off by graduation date.
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Not anymore.
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Paul's daughter followed in his footsteps,
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but with one difference:
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when she graduated five years ago,
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it was with a whopping debt.
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Students like Kate have to take on a loan
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because the cost of higher education
has become unaffordable for most --
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for many if not most American families.
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But so what?
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Getting into debt to buy an expensive
education is not all bad
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if you could pay it off
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with the increased income
that you earned from it.
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But that's where the rubber
meets the road.
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Even a college grad earned 10 percent
more in 2001 that she did in 2013.
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So ...
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tuition costs up,
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public funding down,
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family incomes diminished,
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personal incomes weak.
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Is it any wonder that more than
a quarter of those who must
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cannot make their student loan payments?
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The worst of times
can be the best of times,
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because certain truths flash up
in ways that you can't ignore.
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I want to speak of three of them today.
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1.2 trillion dollars of debts for diplomas
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make it abundantly obvious
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that higher education is a consumer
product you can buy.
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All of us talk about education
just as the economists do now.
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As an investment that you make
to improve the human stock
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by training them for work.
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As an investment you make
to sort and classify people
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so that employers can
hire them more easily.
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The U.S. News & World Report
ranks colleges
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just as the consumer report
rates washing machines.
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The language is full --
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peppered --
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with barbarism.
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Teachers are called service providers,
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students are called consumers.
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Sociology and Shakespeare
and soccer and science,
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all of these are content.
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Student debt is profitable.
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Only not on you.
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Your debt fattens the profit
of the student loan industry.
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The two 800-pound gorillas of which
Sallie May and Navient,
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posted last year a combined
profit of 1.2 billion dollars.
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And just like home mortgages,
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student loans can be bundled
and packaged and sliced and diced,
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and sold on Wall Street.
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And colleges and universties that invest
in these securities loans ...
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profit twice.
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Once from your tuition
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and then again from the interest on debt.
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With all that money to be made,
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are we surprised that some
in the higher education business
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have begun to engage in false advertising,
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in bait and switch?
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In exploiting the very ignorance
that they pretend to educate.
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Third,
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diplomas are a brand.
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Many years ago my teacher wrote,
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"When students are treated as consumers,
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they're made prisoners
of addiction and envy."
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Just as consumers can be sold and resold
updated versions of an iPhone,
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so also people can be sold
more and more education.
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College is the new high school,
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we already say that.
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But why stop there?
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People can be up-sold on certifications
and recertifications,
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masters degrees,
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doctoral degrees.
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Higher education is also marketed
as a status object.
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Buy a degree,
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much like you do a Lexus
of a Louis Vuitton bag,
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to distinguish yourself from others.
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So you can be the object
of envy of others.
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Diplomas are a brand.
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But these truths are often times hidden
by a very noisy sales pitch.
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There is not a day that goes by
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without some policy guy
sitting on the television
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telling us,
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"A college degree is absolutely essential
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to get on that up escalator
to a middle-class life."
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And the usual evidence offered
is the college premium:
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a college grad who makes on average
56 percent more than a high school grad.
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Let's look at that number more carefully,
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because on the face of it,
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it seems to belie the stories we all hear
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about college grads working
as baristas and cashiers.
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Of 100 people who enroll in any form
of post-secondary education,
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45 do not complete it in a timely fashion
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for a number of reasons,
including financial.
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Of the 55 that do graduate,
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two will remain unemployed
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and another 18 are underemployed.
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So,
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college grads earn more
than high school grads,
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but does it pay for the exorbitant tuition
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and the lost wages while at college?
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Now even economists admit
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going to college pays off
for only those who complete it.
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But that's only because high school wages
have been cut to the bone,
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for decades now.
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For decades,
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workers with a high school degree
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have been denied their fair share
of what they have produced.
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And had they received as the should have,
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then going to college would have been
a bad investment for many.
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College premium?
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I think it's a high school discount.
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Two out of three people who enroll
are not going to find an adequate job.
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And the future for them doesn't look
particularly promising,
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in fact downright bleak.
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And it is they who are going to suffer
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the most punishing forms of student debt.
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And it is they,
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curiously and sadly,
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who are marketed most loudly
about this college premium thing.
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That's not just cynical marketing,
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that's cruel.
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So what do we do?
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What if students and parents treated
higher education as a consumer product?
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Everybody else seems to.
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Then,
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like any other consumer product,
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you would demand to know
what you're paying for.
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When we buy medicines,
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we get a list of side effects.
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When you buy a higher educational product,
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you should have a warning label
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that allows consumers to choose --
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make informed choices.
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When you buy a car,
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it tells you how many
miles per gallon to expect.
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Who knows what to expect
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from a degree say, in Canadian Studies.
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There is such a thing by the way.
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What if there was an app for that?
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One that linked up the cost of a major
to the expected income.
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Let's call it Income Based Tuition or IBT.
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One of you make this.
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(Laughter)
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Discovery of reality.
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There are three advantages,
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three benefits to Income Based Tuition.
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Any user can figure out
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how much money he or she will make
from a given college and major.
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Such informed users
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are unlikely to fall victim
to the [Huckster's] ploy,
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to the sales pitch.
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But also to choose wisely.
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Why would anybody pay more for college
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than let's say, 15 percent
of the additional income they earn?
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There's a second benefit
to Income Based Tuition.
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By tying the cost to the income.
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College administrators would be forced
to manage costs better,
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to find innovative ways to do so.
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For instance,
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all of you students here pay roughly
the same tuition for every major.
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That is manifestly unfair
and should change.
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An engineering student uses more resources
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and facilities and labs and faculty
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than a philosophy student.
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But the philosophy student,
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as a consequence,
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is subsidizing the engineering student.
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Who then,
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by the way,
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goes on and earns more money.
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Why should two people
buy the same product --
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buy the same product --
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pay the same,
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but one person receive half
or a third of the service.
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In fact,
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college grads,
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some majors,
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pay 25 percent of their income
servicing their student debt
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while others pay five percent.
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That kind if inequity would end
when majors are priced more correctly.
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Now of course,
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all this data --
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and one of you is going to do this right?
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All this data has to be well designed,
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maybe audited by public accounting firms
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to avoid statistical lies.
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We know about statistics, right?
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But be that as it may,
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the third and biggest benefit
of Income Base Tuition,
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is it would free Americans from the fear
and the fact of financial ruin
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because they bought a defective product.
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Perhaps,
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in time,
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young and old Americans may rediscover,
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as the gentleman said earlier,
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their curiosity,
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their love of learning.
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Begin to study what they love,
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love what they study,
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follow their passion.
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Getting stimulated by their intelligence.
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Follow paths of inquiry
that they really want to.
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After all,
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it was Eric and Kevin,
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two years ago,
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just exactly these kinds of young men,
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who prompted me and worked with me --
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and still do --
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in the study of indebted
tudents in America.
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Thank you for your attention.
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(Applause)
易帆 余
What is the meaning of "be upsold on" at 5:02 ?