Is the student loan portfolio too BIG to fail? The default rate increased 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 is “too big to fail”.
- 80 percent of grads since 2008 did not have jobs the days their Presidents or Deans handed their diplomas to them.
While everyone is anxious to hear what solutions the President has in mind to solve our unemployment situation, college educated Gen Xers, 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 degrees.
- Grads’ careers are being delayed and 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 jobs!
- Marriages are delayed or never consummated due to huge student loans.
- Grads are working in careers totally unrelated to their degrees.
We have an enormous amount of talented, educated grads from the finest institutions in the world that are living in their parents’ basements 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 internships and employment to in college and continue to help them 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-sized and Fortune 500 companies
- Handle overflow customer service chats, emails, or phone calls
- Conduct polls and research and write blog articles
- Take inbound sales calls or make outbound sales calls
College Presidents could start in their own back yards 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 courses 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, businesses, and congressional leaders to implement cost effective solutions to not only rescue troubled lives, but to shore up a shaky loan program and 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?