Student Loans – Let’s Rethink the Concept #2

Blog, Education, Les Routledge

The Financial Post published comments from readers on the student loan subject.

One interesting threat I observed is that increased public sector funding of post secondary education is leading to inflation of credentials to secure employment.  Do employers offering employment that pays under $30 per hour really require post secondary degrees?

The other theme that appears is that too many people are training in fields for the employment available in them.  In this situation, to me, the student loans should take a portfolio approach where a basket of loans is used as the basis for repayment instead of requiring each individual to repay irregardless of the employment status.  While there are down sides to income-contingent repayment methods, they are a better option that what is in place today.

Post secondary education can be a good investment, but we need to evolve a system that establishes a better cost-benefit relationship between the investment and the requirements to repay student debt.  In my mind, providers need to bear a much larger proportion of the repayment risk by connecting the payments of the tuition and other fees to the resulting increased earnings potential of their students.

In a general concept, what I am asking is for a policy framework that holds the provider institutions responsible for achieving outcomes instead of being paid for supplying inputs which may or may not be effective.  We need to weed out the equivalent of snake oil providers in the education provider sector.