Six ways to avoid a student loan crisis and boost jobs for college grads
Our nation has a problem: Students are graduating with huge amounts of debt and bleak job prospects. With the average loan size at $12,800, college graduates collectively now shoulder over a trillion dollars in debt. With 60 percent of recent college graduates unable to find full-time jobs in their chosen professions, many have little hope of paying off these loans.
Student loan debt may replace home mortgages as the next debt crisis. What can our nation do to change the dynamic so graduating students can get jobs, get out of their parents’ homes, pay off their loans and become wage-earning, taxpaying Americans? Here are a few ideas:
Reverse, or weaken, the laws barring age discrimination. Because Americans are healthier and living longer, many are keeping their jobs past the traditional retirement age of 65. In a 2008 study, the U.S. Census Bureau noted that workers aged 65 and older accounted for about 17 percent of the labor force but will reach 22 percent by 2020. This is great in a full-employment economy but harmful when these older workers block new entrants, receive special protection under the law and are often the most highly paid employees (costing multiple times the salary of a recent college graduate).
The place to start with a review of age discrimination laws is in higher education. In 2006, the last time the Department of Education released its survey of postsecondary faculty, the average age for tenured faculty members was 54. In 1993, the average age was 51. These professors are highly paid, nearly immune to firing and have little incentive to retire. Yet older tenured professors block the pipeline for a younger generation of academics. And if this works at the college level, it should and can work anywhere new graduates are blocked by older workers whose positions are protected by the law.
Rescind the Obama administration restrictions on unpaid internships. In April 2010, the Department of Labor (DoL) issued rules that severely restrict internships that are unpaid or pay below the minimum wage unless rigorous academic standards are met. The DoL binding legal interpretation ended many corporate intern programs and broke links between students and real-world business jobs. The result was fewer internships, less exposure of businesses to students and reduced hiring of recent college graduates. My company now rarely hires recent college graduates unless they have interned with us, and we have fewer interns now than we did before this rule.
Connect colleges with local businesses. Having spoken to many business and academic groups this past year promoting my book on innovation, I often hear about the disconnect between educators and business. While college presidents worry about jobs for their graduates, local businesses and economic development experts are frustrated by what colleges produce and what businesses need. The two groups need to link up in creative ways. For example, one college in Canada requires all term papers in its business program to be certified by a local business as solving a business problem. Innovative colleges tap business leaders to teach, develop curricula and sit on relevant boards. It seems obvious that a college’s graduates are more likely to be hired by local businesses if the college has a close and cooperative connection with the business community.
Tie student loans to areas of study. With 3.5 million unfilled jobs and the relatively high unemployment rate of college graduates, it is clear we suffer from a disconnect between the skills our college graduates possess and the skills that employers need. The Wall Street Journal has a useful rundown of popular majors and unemployment rates. While mathematics and computer science ranks extremely low on the popularity scale (158 out of 173), just 3.5 percent of college graduates who majored in that field are unemployed. Meanwhile, sociology, which is the 19th most popular major, has a 7 percent unemployment rate. With this in mind, we should tie student loans to a national strategy that incentivizes students to choose career paths in high-priority, high-growth sectors.
Remove government-created barriers to economic growth. All prior points pale in comparison to the importance of a healthy economy, which requires a government that — at the very least — does no harm. Recently, business growth has been stifled by scores of new and proposed rules, as a March Heritage Foundation study found. Add to this a surfeit of choking new labor rules, new employer health mandates, the world’s highest corporate tax rate, threats of higher taxes, a deficit and debt standoff and the demonization of business, and we have a toxic stew suppressing the economy and business hiring.
Expand access to, and create more, community colleges. Community colleges are the unsung heroes of higher education: they are more focused, offer better interaction with professors and are much cheaper than universities. They’re also untapped job markets for graduates looking to go into academia. But clearly the lower reputation of community colleges leads many job-seekers to wait it out for the tony university gig. This is a shame. As a society, we need to lose the stigma attached to community colleges and trade schools, and expand their role as an alternative (in some cases, a better alternative) for both students and future professors.
Without jobs, college graduates cannot pay off student loan debts. The student debt crisis, like the mortgage crisis, is foreseeable. Absent action, we face another economic calamity, albeit this one by unemployed, under-utilized and unhappy college graduates.
Gary Shapiro is president and CEO of the Consumer Electronics Association (CEA)®, the U.S. trade association representing more than 2,000 consumer electronics companies, and author of the New York Times bestselling book, “The Comeback: How Innovation Will Restore the American Dream.”