An idea that deserves an F: Getting paid for college grades

When I first read the press on Ultrinsic I felt an immediate roll of my stomach.

Here's a site where the most prized target of marketers - incoming college freshman -- can sign up and place a "bet" on their grades. If they get the grades, they make money on the bet. If not, they lose the money they put down. "This (incentive) helps remove one of the large barriers students have to studying and staying motivated over the course of long semesters of college..." explains Ultrinsic Chief Operations Officer Judah Guber, in "Pay for an A?" by Andrew Gelman.

I suspected Guber (who graduated college himself in 2005 with B.A. from CUNY-Queens College) had it wrong. How could just paying for grades somehow provide a magic bullet for motivating students to study harder? But I continued to read, seeking first to understand.

Here's what I discovered. Ultrinsic makes its money when college students fail to get the grade they were shooting for. Students are allowed to make a bet -- small at first -- on how well they think they will perform in a class. "As" pay better than "Bs." A student's "bet" is their skin in the game. Ultrinsic puts up the rest of the money.