Tales of an "Average" Graduate

Because graduating from college in 2009 wasn't depressing enough, I've just been told by People Capital's new Human Capital Calculator that my future earnings potential, and thus my ability to secure a student loan, are just "average."

Using factors such as an individual's high school, standardized test scores, college, major and GPA, the Human Capital Score assigns a numeric value to a student's desirability for a private loan based on the amount of money she will earn in the short and long term. Since most students are generally without a credit score by the time they graduate, the Human Capital Calculator sounds like a great way to determine the risk associated with different students--or does it?

People Capital's Human Capital Score works on the assumption that all students who attend a certain college and study a certain subject will earn the same amount of money in the future. What's troubling is that those who graduated from private secondary schools and elite colleges are given higher scores, as are students who majored in traditionally higher-earning disciplines, such as business or engineering. So if you graduated from Yale with a degree in financial economics and plan to get your MBA, your Human Capital Score makes you a more desirable candidate for a loan. But if you attended Penn State, studied history and plan on entering the workforce immediately after graduation, you'd better start saving up.

What the Human Capital Calculator admittedly cannot take into consideration is the candidate's "willingness to pay" and other personal characteristics that cannot be quantified. Although an applicant may have the potential to earn a large amount of money, that doesn't necessarily mean she will be responsible with her finances (MC Hammer, anyone?). In determining the amount of money a student has the ability to earn, the entire candidate should be taken into consideration. If extracurriculars and work experience are thought to be indicators of potential success during the admissions process, they should be used as indicators of potential success during the loan application process as well.

Having graduated with an English degree from a public university, I was sad to learn that if I do choose to apply for a loan, my work ethic and experience may not matter as much as the fact that I went to a public school. While test scores and college academic experiences are legitimate factors in determining a candidate's potential to succeed in the job market, so are an individual's personal traits. Although more difficult to plug into a calculator, they are no less important in separating one loan applicant from another. My desirability may just be "average," but I think those characteristics should count for something too.

-Posted by Rebecca Zissou