Use virtuous cycle to improve ability and hiring

Young people need a good education to get a good job, a reality well known to high school seniors and their parents currently weighing their college options.

But the converse is also true: young people need good job prospects as an incentive to study diligently, and our college-capable students need good prospects to encourage them to take on the significant financial risk and burden of the student loans that most need to go to college.

We should focus on the converse. Fixing the job outlook is the best way to fix education.

The poor job market for high school and college graduates is creating many of the problems in secondary and higher education. As a May 2013 McKinsey & Co. study found, increasing numbers of college grads are only finding low-paying jobs that don't require college skills. So logic would suggest fewer kids should incur the extreme expense of going to college, except that job prospects without a college degree are abysmal. So, many students push desperately to go to college to avoid a seemingly dystopian fate, while others surrender to that fate and drop out of high school.

The desperation of having to get a college degree puts inevitable pressure on colleges to ease admissions and graduation standards. This, in face of the fact that most business employers are already dissatisfied with job skills of many college graduates.

Sending more and more under-prepared kids to college, who will have little prospect of landing good-paying jobs, is an investment that is not paying off. As a result, we have serious problems with student debt.

Over the last decade, student loan debt has exploded, tripling to about $1.1 trillion, which exceeds every other form of consumer debt except home mortgages. Post-Recession delinquencies on student loans have skyrocketed. At 11.5 percent at the end of 2013, the delinquency rate is far above any other form of household debt.

Moreover, as with the proverbial iceberg, real danger lies beneath the surface: about 45 percent of the debt does not yet require payment, primarily because the borrowers are still in school. This leaves the delinquency rate amongst borrowers who should be making current payments approaching an astounding 23 percent.

The nation faces a student loan crisis.

In the face of that crisis we hear continued calls to send more kids to college, accompanied by pleas for more federal student aid.

Increasing attendance by extending more federally guaranteed loans will only exacerbate most of these problems.

A better answer would be to provide businesses tax incentives to hire both high school and college graduates. However, this alone would only saddle employers with employees who they would otherwise be reluctant to hire, and who they would likely release when the incentives expire. So, society also needs to improve student achievement.

Instead of President Obama's proposal to condition federal aid to colleges upon their success in job-placement of their graduates, federal aid to college applicants should be tied to a minimum threshold of high school achievement - minimum standardized test scores, minimum GPA, and/or minimum class rank.

These two proposals - tying student aid to academic performance and providing incentives for hiring - would create a virtuous cycle in our educational system. Higher achievement would be both required and rewarded.

With high school graduates landing jobs there would be less desperation to go to college and, therefore, fewer marginally prepared students enrolling in college. There would be more hope for those with only a high school diploma and a resulting lower high school drop-out rate. With more capable students graduating college and with more employers hiring them into good jobs, they would be better able to meet their student loan obligations.

These reforms would improve prospects for both high school and college graduates. This is especially important for young people holding only a high school diploma. Everyone can't go to college, but everyone can finish high school and obtain a diploma. In today's desperate college-or-bust atmosphere, these diploma-holders should not be overlooked.

There is no need to wait for slow-moving Washington to institute these reforms. Hartford can provide a state business tax incentive to Connecticut businesses that hire graduates of Connecticut high schools and colleges.

Red Jahncke heads the Townsend Group, a business consulting firm in Greenwich. He is an occasional contributor to The Day's opinion pages.

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