Earl Waldin

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• October 6, 1999, on Tuition-free MIT:

  There is another method of funding a free education at MIT that has not been discussed, but which I have run across a couple of times. The basic idea is that any MIT alumni that starts a company must give some small percentage of the initial stock to MIT. This is a contract that students agree to before they start their studies. If I recall correctly, the study that I read claimed that, based on historical data of actual companies, this percentage was something like 1% or not much more. Because the stock is given at the founding, not at the point of an IPO, its value at the time of giving is very small, making it "easier" to give. If a company does not do well or goes belly up then the stock is indeed worthless. If, however, enough companies do well (and historically they do) then in time MIT makes enough money to train the next generation of entrepeneurs. One can interpret this as MIT investing in its own students. Also, since MIT owns the money generating investment, MIT retains co...