As college seniors are beginning their transition into post-graduate life this May, many of them will begin to face the harsh realities of student loan repayment. Regardless of what major each student chooses and what their employment outcomes turn out to be, most will begin tackling these mountains of debt within a few months.
Higher education in America has proven to be an especially divisive topic since President Trump’s appointment of Betsy DeVos as Secretary of Education. Although it is not entirely clear what policies she will enact to reform higher education, reforming the university system does not have to be as complex and sweeping as what many lawmakers and educational policy experts are calling for.
However, I propose that the Department of Education should require every college and university to report, by major, five-year post-graduation employment, income, and loan repayment rates. This hypothetical report would be distributed to all incoming university students in their respective welcome packet in addition to being published online.
How would this data help an incoming freshman? Selecting a major as a freshman is a tough decision that involves a lot of asymmetric information. New students may not understand labor market saturation, potential post-graduation salaries, or whether there are employers in their home state waiting to hire them. Statistics that provide a 30,000-foot view of income and employment prospects by major is a simple way to ensure students know what they are signing up for when they decide their major. Waiting until students default on their loans should be unacceptable to our elected Members of Congress and our fellow taxpayers.
It is a sad fact that our nation’s universities bear no burden on whether a student succeeds or fails after graduation. Consequently, if the student defaults on their federal loans or is not able to pay, the university does not feel the financial burden that is felt instead by the taxpayers. The misalignment of student outcomes and university incentives should be corrected, and modifying the statistics provided to incoming freshman is just one small change that could provide a big impact.
Solving the issue of asymmetric information in choosing a major is one way we can help incoming students understand what they are signing up for. Whether a student chooses to study art history or engineering, they should, at a minimum, be well educated on the costs and return on their investment.
The current proposals to tackle this issue vary greatly with total debt forgiveness and free college on the one hand, and, on the other hand, income-based loan repayment. Both of these, and other proposals being put forward, are too contentious to garner bipartisan support. Starting small and changing the way universities distribute post-graduation data to incoming freshman is a small way for both sides to agree on a starting point for a solution to this issue.
Matt Joyner is a finance professional in the Metro-Portland, Oregon area. He is a 2016 economics graduate from Michigan State University. You can find him on Twitter @MattAJoyner or contact him at firstname.lastname@example.org