Solving the Student Loan/Debt Crisis: A Plan That Can Work

On sites like Reddit, 4chan, and College Confidential, stories of college graduates saddled with piles of debt and poor job prospects, are becoming commonplace:

Many on the ‘left’ (and I say ‘left’ because it’s mainly democrats who raise this issue) complain about student loan debt being too high, as well as poor job prospects for new graduates, who are either unable to find a job, or if they get a job, the job isn’t commensurate with their credentials (for example, anthropology majors waiting tables).

But what if there were a way to break the student loan debt cycle, or at least put a dent in it.

As I said before, the higher education system is broken, due to ‘good intentions’ gone wrong, and many entities shoulder the blame: students, politicians, guidance counselors, culture and society, and parents.

In the case of high school graduates, they have one of three options:

- skip college and enter the workforce
- go to college and major in a liberal arts subject
- major in STEM

The first choice results in no debt but also the worst job prospects of all. The second may result in a lot of debt and mediocre job prospects. The third choice may also result in debt but also has the best job prospects. As a caveat, those who graduate from elite colleges can typically major in anything and still have decent job prospects, but they are of the minority. Most students are aware that STEM pays more and has better job opportunities, but they choose the liberal arts anyway. That’s their choice, but they should not be surprised if they are unable to find good job afterwards – they were warned.

Most graduates (such as the example from Reddit above) are reasonably intelligent. According to research by Charles Murray, the typical college graduate has an IQ of around 115, which is one standard deviation above average. Thus to some extent a college degree (even for non-STEM majors) signals above-average intelligence, which could explain why many employers, particularly for higher-paying jobs, require a college degree, or ceteris paribus will choose a candidate who has a degree over one who doesn’t. Studies have shown that IQ and job performance are correlated, probably because smarter employees learn faster and are better able to anticipate the needs of customers and their employers.

Another issue is debt. Working as a barista for Starbucks may suck, but it’s even worse if you have a lot of debt. There’s no reason why anyone should have to spend tens of thousands of dollars (or even hundreds of thousands), and four to seven years of their life, to get a piece of paper that signals ‘merely above-average intelligence’. Worse yet, most jobs are completely unrelated to the degree. Very few literature, anthropology, and history majors actually get jobs pertaining to literature, anthropology, or history.

Grade inflation and credentalism are related. Because of grade inflation, increasingly advanced degrees are required signal competence and ‘stand out’:

This means more debt and more years of college to acquire these advanced degrees, including but not limited to PHDs and Masters Degrees – money and time that could otherwise be spent on ‘life’, not education. High school degrees don’t get much mileage as they did decades ago, because if everyone is getting a 4.0 GPA and ‘honors’ due to dumbed-down courses, what good is it. Another cause of credentalism is that the labor pool has swelled, which is not just limited to the United States but also includes many emerging economies. The problem is the skills that are taught in collage and high school have become commoditized and are no longer ‘special’. Employers can easily outsource workers, filling jobs that decades ago would have gone to high school or even college graduates, because basic skills (like reading and writing) have become so common. And then there is also technology, which may result in low-skill jobs being automated. Either the courses are dumbed-down or too many people are completing school – it’s probably both.

Although some students go to college for the ‘experience’ and the ‘pursuit of knowledge’, many attend in the hope of landing a good-paying job when they graduate. If making money is goal, and for most students it is, there is an alternative to the current dysfunctional system. Because in the eyes of employers a college degree signals above-average intellect and competence, the obvious solution is to give employers carte blanche to screen prospective employees for intelligence using cheap, easy-to-administer IQ-type tests. This would help both employers and students. It helps employers because IQ tests (as well as related tests like the SAT and the Wonderlic) may provide a cheaper, more reliable means of assessing the intelligence and competence of potential employees than college degrees, which have been devalued by grade inflation. For students and job seekers the benefits are even more obvious: no more debt and years spent acquiring increasingly advanced degrees in the hope merely of being qualified, let alone getting a job. Even if high-scoring students are unable to find good-paying jobs (due to the economy and other factors), not accumulating a bunch of debt for that same crummy job would be a success for the program.

For this solution to be implemented, disparate impact laws (Griggs v. Duke Power) would need to be overturned. Although some large companies (like Proctor and Gamble) use these tests, they also have the financial resources and case study data to fend off litigation, which small business cannot. Not to make this too political, if the ‘left’ cared about students a much as Sanders or Hillary say they do, they would make a push to overturn disparate impact laws.

In the unlikely event Griggs is annulled, private (or maybe publicly run) mass testing centers can be established, independent from employers. Anyone can register to have their intelligence tested on one of multiple tests, in order of increasing complexity and administrative costs: Wonderlic, SAT, or Wais. The Wonderlic is a 50-question multiple choice test of general competence (basic numeracy, vocab, etc.), and takes 12 minutes to complete. The SAT is more comprehensive and takes much longer to administer, and like the Wonderlic only tests mostly math and verbal skills. The Wais the most comprehensive of all, and tests a wide range of abilities, such as spatial intelligence, which the other two tests don’t. Upon registering an account (req. govt. ID) and obtaining scores on one or multiple tests, this information can be provided who employers, who will have the ability to enter a code to verify the score on an online database.

Some may be surprised to learn that anyone who wants to enlist in the US military must score in the 33rd percentile or better on the AFQT, a test administered to all enlistees that measures ‘general skills, which is related to IQ (although in times when cannon fodder is needed the bar may be lowered), so why can’t such a testing system be adopted for the general public, for use by employers?

A common criticism is that the less intelligent would be discriminated by such a system, but the unintelligent often drop out of college (the result being debt and no degree) at a very high rate, so by not going to college and instead being tested, they would save money, which is especially helpful considering the lifetime incomes of the less intelligent isn’t very high, so they are hurt the most by having student loan debt. It’s not like the unintelligent are being deprived of their opportunity to work for NASA by being tested. Second, the likely economic tailwind from reducing student loan debt, getting young people into the workforce earlier, and boosting employer productivity would create more total jobs, benefiting job seekers of all intelligence levels.

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