Could Your Student Loans Make You Unemployable?
One major reason people pursue a college degree is to get a better job. But what if the debt accrued to finance an education itself becomes an obstacle to employment? That’s what happened to Latoya Horton.
“Years ago I went to college to study accounting, and like millions of other Americans I took out loans to pay for it,” writes Horton. “A few years later I got a temporary job in the accounting department at Bain & Co., and after 6 months of reliable work I was thrilled to be offered a full-time position.”
But then things took a turn for the worse:
just a few weeks after starting in my new position the company fired me because my debt-to-credit ratio was too high. I later learned that 60% of employers now check credit reports, which typically include student debts. How are you supposed to pay off your student debts if you can’t get (or keep) a job BECAUSE of your debts? And what do my student debts have to do with my ability to do a job well anyway?
Horton channeled her frustration not only to her former bosses, but toward the corporations relentlessly hawking credit reports to employers. In April, she launched a petition on Change.org calling on credit reporting giant TransUnion to stop selling credit reports to employers. Her plight resonated: within just a week, the petition accumulated more than 40,000 signatures and is still gaining rapidly. The appeal mirrors one signed by more than two dozen civil rights, fair employment and consumer groups (including Demos) asking TransUnion to discontinue its sale of employment credit reports due to their discriminatory impact, lack of validity in predicting job performance, and the frequency of errors.
But the petitions also point to a larger reason to oppose employment credit checks: they serve as an illegitimate barrier to people finding work. Horton points out that Penny Pritzker, TransUnion’s Chair and partial owner, sits on President Obama’s Jobs and Competitiveness Council, which advises the President on putting Americans back to work. It’s ironic, Horton notes, that someone is “advis[ing] on national job creation when her company sells products that may keep qualified people out of work.”
Why has Horton’s petition proven so popular? The idea that student debt would disqualify someone for employment strikes at the heart of America’s fundamental belief in opportunity. The United States has historically been a nation of self-improvers where those who make the effort to invest in their own future -- especially through education -- garner rewards for doing so. If low-income students who must borrow to afford a college education are then shut out of jobs because of their student debt, we are one step closer to a society in which only the already-privileged can access opportunity.
A seemingly trivial human resources practice -- running credit checks on job applicants and employees -- becomes the mechanism for tremendous discrimination and denial of opportunity.