in the 1970s, yale university attempted to replace traditional student loans with human capital contracts under its "tuition postponement option", a program designed by economists milton friedman and james tobin. however, the program was eventually abandoned as a failure. other attempts to use human capital contracts (or student loans with equity-like payoffs) to fund students, have also generally failed because of severe adverse selection problems—students who opt into such programs are generally those who expect to pursue low-income careers, and are least likely to be able to repay their loans. in addition, human capital contracts, like income taxes, can contribute to moral hazard, by discouraging borrowers from maximizing their income and encouraging them instead to focus on non-wage based forms of compensation, such as more enjoyable work, better benefits, or lighter schedules.