Liberal Art Grads Less Likely to Pay Back Student Loans

[Boges]

Just as we hear that governments are being forced to write off a large number of student loans, we have this study.

http://www.guelphnow.ca/npps/story.cfm?nppage=1813

University graduates in applied and professional programs such as business and engineering are more likely to pay back their student loans than their counterparts in liberal arts or in similar college programs, according to a new study from the University of Guelph.

The study found that university students are generally more likely to repay loans than their college counterparts despite higher university tuition fees. It also found that, starting salaries being even, students in certain fields, including business, health or engineering, were more likely to repay their student loans than those in the liberal arts.

It was authored by Guelph sociology professor David Walters and Laura Wright, who wrote the paper while completing her MA at U of G, along with David Zarifa, a sociology professor at the University of Nipissing. They analyzed student data from Statistics Canada’s most recent version of the National Graduates Survey, with about 40,000 responding graduates from all provinces and territories.

The study controlled for a range of factors, including starting salaries. It excluded those in graduate programs and those who took additional schooling after completing a degree or diploma.

“Since college graduates earn less on average than university graduates, and graduates of liberal arts fields typically earn less than graduates of applied fields, we expected that the former would be more likely to default on their student loans,” said Wright, now a PhD candidate at Western University.

Is this a surprise to anyone? It baffles me why anyone would consider taking out a loan to go into a program that has little to no prospect of employment.

I really do think student loan organizations should look at the employment prospect of a program before giving a loan. You certainly have to defend the program you want to go into when you apply to a second career program.

I know people will complain that they can't find decent work but why should you expect gainful employment with a History degree or an English Degree or a Human Rights Degree.

Edited February 28, 2013 by Boges

[cybercoma]

I know people will complain that they can't find decent work but why should you expect gainful employment with a History degree or an English Degree or a Human Rights Degree.

What's funny about your statement is that regardless of the degree, there is a significant return on wages for education. Even people with BA as a group make more than those without a university degree. In fact, their earnings curve is significantly steeper.

In any case, your question applies equally to any degree. Why should anyone expect gainful employment with any degree? Hell, why should anyone expect gainful employment ever?

IMO, you're asking the wrong question.

[cybercoma]

On a tangential note: economists are liberal arts grads, as are the vast majority of lawyers.

[Boges]

On a tangential note: economists are liberal arts grads, as are the vast majority of lawyers.

Yeah but they move on to other things. I'm sure this study is taking that into consideration. A lawyer's education costs must be huge but their future income should compensate for that.

Lots of teachers take Liberal Arts degrees before moving on.

[BubberMiley]

I'm sure this study is taking that into consideration.

Why are you sure?

[Bonam]

What's funny about your statement is that regardless of the degree, there is a significant return on wages for education. Even people with BA as a group make more than those without a university degree. In fact, their earnings curve is significantly steeper.

In any case, your question applies equally to any degree. Why should anyone expect gainful employment with any degree? Hell, why should anyone expect gainful employment ever?

IMO, you're asking the wrong question.

This has been discussed here before, and there is a considerable variation in average earnings and unemployment rates of university grads based on degree. As for "expecting" gainful employment... one indeed should expect gainful employment when one graduates from a program where 90%+ of graduates do find gainful employment. Of course, expecting something (as a matter of likelihood/probability) is very different from being entitled to something (i.e. expecting someone to give it to you).

The moral of the story here is that different degrees have different economic prospects, and institutions issuing student loans should (and some already do) take this into account when determining the size and terms of the loans they make available to students, just like they evaluate loan applicants on other facts of their risk profile.

Edited February 28, 2013 by Bonam

[BubberMiley]

The moral of the story here is that different degrees have different economic prospects, and institutions issuing student loans should (and some already do) take this into account when determining the size and terms of the loans they make available to students, just like they evaluate loan applicants on other facts of their risk profile.

So? Universities also already take this into account when determining tuition fees.

But is Boges saying those that go on to get a Master's in a professional program should not have had the opportunity to get a student loan for their initial Bachelor's degree?

[Peanutbutter]

I think this is a go nowhere topic really. Let people study what they're passionate about and don't forgive the loan.

Edited February 28, 2013 by Peanutbutter

[TimG]

We need STEM graduates and we need liberal arts graduates.

It makes no sense to push people into STEM programs that have no interest in the programs.

Even if they got a job they might not be that good at it.

But we can do better with the tuition subsidy provided by governments.

If a field is in demand the tuition subsidy should increase.

If the field has no demand the subsidy should decrease.

There should also be caps on loans based on employment prospects.

i.e. if you really what to study medieval literature you need to fund it yourself.

if you want to study economics or engineering then the government will loan you more.

Edited February 28, 2013 by TimG

[Moonlight Graham]

Professionals like engineers and those in business (minus economics, as Cybercoma pointed out, which is a social science/arts degree) and health fields are more likely to pay back student loans than arts grads? NO, REALLY????? They make more money because of their fields, of course they're going to be better able to pay back their loans. This is an almost useless news item and research study. Maybe the money used to fund the research for this study should have been used to lower student fees at the University of Guelph because they just flushed it down the drain anyways. New study concludes that water is wet!

[The_Squid]

Maybe university should be more affordable so people aren't loaded with such a high burden of debt.

[Peanutbutter]

That's fine squid. As long as the teachers agree to a large pay cut.

[Peter F]

We need STEM graduates and we need liberal arts graduates.

It makes no sense to push people into STEM programs that have no interest in the programs.

Even if they got a job they might not be that good at it.

But we can do better with the tuition subsidy provided by governments.

If a field is in demand the tuition subsidy should increase.

If the field has no demand the subsidy should decrease.

There should also be caps on loans based on employment prospects.

i.e. if you really what to study medieval literature you need to fund it yourself.

if you want to study economics or engineering then the government will loan you more.

Or maybe the corporations should be subsidizing those students taking needed courses. Why should the government act as the corporate proxy

[TimG]

Or maybe the corporations should be subsidizing those students taking needed courses. Why should the government act as the corporate proxy

I know that left wingers have pathologically insane hatred of corporations but this statement absurd even by those standards.

University education is subsidized as a social program to promote social mobility. To make this program effective the government should provide incentives to encourage students to choose fields that have a decent prospect for earning a living and improving their prospects.

University is not subsidized so people can find 'personal fullfillment'. People looking for that should pay more of the cost.

Edited March 1, 2013 by TimG

[Bonam]

I know that left wingers have pathologically insane hatred of corporations but this statement absurd even by those standards.

University education is subsidized as a social program to promote social mobility. To make this program effective the government should provide incentives to encourage students to choose fields that have a decent prospect for earning a living and improving their prospects.

University is not subsidized so people can find 'personal fullfillment'. People looking for that should pay more of the cost.

Not to mention that corporations DO subsidize university programs producing graduates that they need. Corporations donate hundreds of millions to engineering, IT, math, science, etc, departments. At the university where I did my grad studies, the entire brand new EE building was paid for by Microsoft. If not for these donations, it'd be the students footing the bill for these new facilities.

[Guest Derek L]

Not to mention that corporations DO subsidize university programs producing graduates that they need. Corporations donate hundreds of millions to engineering, IT, math, science, etc, departments. At the university where I did my grad studies, the entire brand new EE building was paid for by Microsoft. If not for these donations, it'd be the students footing the bill for these new facilities.

As many facilities/programs/universities etc raise money through Alumni groups....

[Boges]

If you're doing Liberal Arts as a springboard to something else then I have no problem with that. BUT this study indicates that people are getting Liberal Arts degrees and leaving it at that.

[BubberMiley]

If you're doing Liberal Arts as a springboard to something else then I have no problem with that. BUT this study indicates that people are getting Liberal Arts degrees and leaving it at that.

How do you propose they screen people entering the Bachelor's program to ensure they pursue further professional education after they graduate?

[Boges]

How do you propose they screen people entering the Bachelor's program to ensure they pursue further professional education after they graduate?

Perhaps they should ask them. Now they may change their mind, but there's no justification for taking out a loan doing a "Stem" program and leaving it at that.

When they come out and can't pay back the loan people blame the government or the schools.

[BubberMiley]

Perhaps they should ask them. Now they may change their mind, but there's no justification for taking out a loan doing a "Stem" program and leaving it at that.

When they come out and can't pay back the loan people blame the government or the schools.

I'm not aware of people blaming the government or the schools. Where did you get that from?

Nonetheless, yes, they could ask them. And if the loan was contingent on them saying they have plans to pursue a professional degree (or whatever), they would naturally say yes, that's the plan. But those plans change. Their marks could very well also prevent them from pursuing post-graduate work, even if they had every honest intention of doing so.

So ultimately your so-called proposal to vet students beforehand would be absolutely pointless. But I guess it would make you feel better.

[The_Squid]

Perhaps we need a small tax on all businesses to help reduce the costs of university and trade schools. An "education fund". A directed tax, since businesses benefit from a more educated and skilled workforce.

[cybercoma]

That's fine squid. As long as the teachers agree to a large pay cut.

Right... because someone with over 10 years of post-secondary education, who only teaches as one small aspect of their overall career, should take a large pay cut. Why exactly?

[cybercoma]

If you're doing Liberal Arts as a springboard to something else then I have no problem with that. BUT this study indicates that people are getting Liberal Arts degrees and leaving it at that.

Frankly, the people that go into liberal arts programs, do well enough to get honours degrees and straight As... those people are probably going on to grad school anyway. It's the people that go into liberal arts that take the attitude of "Cs for degrees", have no real goals following university, and frankly just aren't very good students... it's those students who are probably having the hardest time. I mean, if you get an English or History degree and only scraped by... well, what can I say?