It's no secret that states and the federal government have found themselves in a financial pinch when it comes to higher education. After years of recession and sluggish recovery, states have slashed per-pupil public spending on higher education by 14.6 percent since 2008. At the federal level, though money for Pell Grants has more than doubled since 2008, the program faces a shortfall of about $6-billion for 2014. It's time to experiment with a new way of leveraging private capital to finance postsecondary education and training--the social-impact bond. In its simplest form, a social-impact bond has three players: (1) the government; (2) private investors; and (3) providers of a social program. Under a bond agreement issued by the government, private investors front the money to providers, who offer services designed to reduce the likelihood that those in the program will need additional government services in the future. But unlike traditional state or municipal bond programs, the government repays investors only if the social program meets agreed-upon performance targets. If the program fails, the government pays nothing. And if it exceeds expectations, resulting in public savings, investors reap a return on their investment. These bonds are now popping up around the United States, including a partnership between Goldman Sachs and New York City to decrease recidivism of young offenders in Riker's Island jail and new programs in Massachusetts to reduce homelessness and juvenile recidivism. President Obama has announced pilot "pay-for-success projects" at the Departments of Labor and Justice to achieve specific social-service outcomes. What do such programs have to do with solving the skills gap? It's time to experiment with a new way of leveraging private capital to finance higher education. Local employers who need more skilled workers face a dilemma when it comes to investing in training employees. Directly subsidizing tuition for employees can help retain workers temporarily, but better-educated employees may also be more likely to defect and join competitors. Meanwhile, binding them to the company in return for postsecondary training raises legitimate concerns about "indentured servitude." Business-sponsored scholarship programs for prospective students present a similar problem: Competitors can get a "free ride" on those investments. The social-impact bond mitigates those problems. It also provides local businesses with an additional avenue to shape postsecondary offerings to reflect labor-force needs.