Is the student loan portfolio – too BIG to fail? Default rate increases from 6.7 to 13.8 in 4 years!
- The student loan portfolio is now approaching one trillion dollars, a point someone is going to suggest that is “too big to fail”.
- 80 percent of grads since 2008 did not have a job the day their President or Dean handed their diploma to them
While everyone is anxious to hear what solutions the President has in mind to solve our unemployment situation, college educated Gen X ers’, Millennials and even Boomers are hoping that President Obama will include employment solutions for them in his speech to Congress and the nation next week.
After all, there is a lot on the line.
The default rate on student loans has doubled in just four years, putting hundreds of billions of dollars in student loans ALREADY in default. And, the problem is not going to go away. This year, like previous years, colleges and universities produced over 1,700,000 graduates (85% in May and June), yet the economy is producing under 75,000 new jobs each month.
College Presidents, President Obama, and our nation’s leaders need to understand there is a lot of pain in those numbers for students and families who trusted these institutions and literally mortgaged their lives to get a degree.
- Grads’ careers are being delayed with their income potential likely stunted for life
- Parents and grads are burdened with huge loan payments reducing their ability to make purchases
- Damaged credit ratings will prevent grads from getting a job!
- Marriages are delayed or never consummated due to huge student loans
- Grads are working in totally unrelated careers than their degrees prepared them for
We have an enormous amount of talented – educated grads from the finest institutions in the world that are living in their parents’ basement and pouring coffee or tending bar to pick up spare change.
I would suggest Congress, Colleges, and Organizations work together to find a way to give meaningful internship employment to every student while they are in college and even after they graduate. I’d love to see a national PAID Internship program that marshals the support of businesses, non profits, religious organizations, state/local governments, and alumni.
A nationwide solution would utilize the Internet to connect organizations to students willing to work.
Students could be employed by these organizations to:
- Develop and manage social media programs for small business like Betty’s Beauty Parlor to mid size and Fortune 500 companies
- Handle overflow customer service chats, emails, or phone calls
- Conduct polls, research, write blog articles
- Take inbound sales calls or make outbound sales calls
College Presidents could start in their own back yard by implementing strategies to make this happen. For instance, they could:
- Assign alumni mentors to incoming freshman – BEFORE they arrive on campus
- Require students to take a career exploration course and learn networking and job search techniques during their four years on campus
- In addition to asking for contributions, challenge alumni to get their organizations to hire an Intern.
Legislatures need to develop programs that will:
- Provide tax breaks to companies providing PAID student internships
- Offer tax breaks on income earned by Interns
- Offer “Student Loan Credits” to students who work at reduced rates
- Build excitement and encourage participation in a national program
Students can’t solve this problem!
Our colleges, government, and lending institutions created this problem. It will require the leadership of our college presidents, business, and congressional leaders to implement cost effective solutions to not only rescue troubled lives, shore up a shaky loan program but, perhaps save the higher education industry itself.
There is a WIN-WIN situation out there if leadership is willing to put aside differences and think creatively.
This is a “Too Big To Fail” situation!
The cost is too high to ignore it, the pain is only going to get worse. Do we have the leadership to step up to this challenge?