A new report submitted to the Texas Legislature says that Texans who earn their bachelor's degrees in the humanities have higher levels of debt and lower earning potential than people who get degrees in math and science-related fields. In 2010, the majors with the highest rates of unemployment were humanities and foreign language degrees; in both of those (rather broad) categories, rates of joblessness were around 15 percent.
Despite appearances to the contrary, the report, titled "Balancing Passion and Practicality," wasn't released from the state Department of No-Shit Studies. Instead, it's a product of TG, a rather odd corporation created in the 1970s by the Legislature. TG stands for Texas Guaranteed Student Loan Corporation, and they have a vested financial interest in making sure the state's college students don't default on their debt.
Until June 30, 2010, TG acted as a middle-man between the federal government and Texas college students receiving Federal Family Education Loan Program (FFELP) loans. It's overseen by a board of directors who are appointed directly by the Governor. The company reviewed loan applications and guaranteed the loans, which totaled out to about $74.2 billion to more than 4.5 million borrowers and their parents. The program ended, and students now borrow and repay the U.S. Department of Education directly. But TG is still guaranteeing around $20 billion in FFELP loans. According to their website, "most of TG's income is derived from fees on the student loans the Corporation has guaranteed and recovery fees on loans it collects."
TG, as you can imagine, has become very passionate about making sure that college students pay back the money they've borrowed. (For a fee, they even offer "default aversion solutions" to colleges, programs designed to help the schools better chase down recalcitrant borrowers.)
The new report, though, is aimed at showing Texas legislators where they say the problem begins: students who borrow a ton of money to get degrees in fields that probably won't pay them much right after graduation (or ever).
Using data from 2009, TG found that people with Engineering degrees can expect to earn the highest monthly salary after graduation, around $3,250. At the same time, they can expect to pay student loans of around $229 a month, or seven percent of their income. Humanities majors, meanwhile, rank at the very bottom: they can look forward to around $1300 month and $237 a month in loans, or a whopping 18 percent of their monthly income. They didn't find that median income differed greatly for people who earned degrees from private institutions versus public ones.
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The report also states that people will still go into those no-money fields if they're total suckers. Sorry. It actually says that "students will continue to major in programs that generally lead to low-paying, high unemployment occupations if they are passionate about them." But it urges students in those majors "to be aware of the economic reality and have backup career plans."
TG suggests that staff at colleges and universities can encourage students to borrow money "sensibly," remain aware of their loan amounts, and finish their degrees quickly. The entire report focuses on personal responsibility, with little or no analysis of rising tuition fees or predatory lending practices. But both are factors which are also helping push the loan bubble past $1 trillion and force students into a situation which they can't even file for bankruptcy to escape.
The report also recommends that schools use analytics to examine "prospective debt-to-income ratios" in order to determine students who are at higher risk of not repaying their loans." Once you've ID'ed those future low earners, it says, "schools should adopt a more proactive, even intrusive [emphasis ours], approach to counseling," one that "urges students to receive financial literacy training, undergo refresher training on loan repayment options and responsibilities, and participate in career counseling sessions or classes."
"We're not saying don't go into social work or theater arts or something like that," Jeff Webster told the Texas Tribune. He's TG's assistant vice president of research and analytical services. "What we're saying is: Make those decisions informed, and have a realistic expectation for what your earnings might be and how much debt you're going to cover after you leave school."