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That's an unproven assumption. If existing lenders aren't willing to loan to minorities, then there would be a fantastic opening to make a profit in loaning mo

That's an unproven assumption. If existing lenders aren't willing to loan to minorities, then there would be a fantastic opening to make a profit in loaning money to poor minorities with high test scores to study STEM.

rayiner 10y ago
20% of African Americans have credit scores below 620 compared to 5% of non-Hispanic whites. On average, disadvantaged minorities don't do as well on standardized tests, and have worse graduation rates even when they attend the same colleges: http://mobile.nytimes.com/2014/05/18/magazine/who-gets-to-graduate.html http://mobile.nytimes.com/2014/05/18/magazine/who-gets-to-gr.... The US is very deeply invested in the idea that the way to overcome the disadvantages faced by members of certain minorities is education. But those same disadvantages make those students worse credit risks. A credit-based system looking to optimize return wouldn't give these students access to the same educational opportunities.
- morgante 10y ago
  A credit-based system looking to optimize return would reflect the likelihood of such students actually graduating and getting good jobs. If the problem is that minority students have difficulty achieving at the level of white students, let's focus on that. I don't think it's very helpful that we saddle these students up with loans but then they don't even end up graduating. Instead of forcing lenders to lend to bad credit risks, let's come up with ways to support minority students so they aren't credit risks. I personally would be happy to invest in minority students studying CS, for example. And yes, it will be somewhat painful in the short term. We'll have to confront the reality that lending to students with low SAT scores to study esoteric subjects is maybe not a good idea. Perhaps it would even encourage such students to not waste their time and money on bad degrees.

rayiner 10y ago

20% of African Americans have credit scores below 620 compared to 5% of non-Hispanic whites. On average, disadvantaged minorities don't do as well on standardized tests, and have worse graduation rates even when they attend the same colleges: http://mobile.nytimes.com/2014/05/18/magazine/who-gets-to-graduate.html http://mobile.nytimes.com/2014/05/18/magazine/who-gets-to-gr.... The US is very deeply invested in the idea that the way to overcome the disadvantages faced by members of certain minorities is education. But those same disadvantages make those students worse credit risks. A credit-based system looking to optimize return wouldn't give these students access to the same educational opportunities.

morgante 10y ago
A credit-based system looking to optimize return would reflect the likelihood of such students actually graduating and getting good jobs. If the problem is that minority students have difficulty achieving at the level of white students, let's focus on that. I don't think it's very helpful that we saddle these students up with loans but then they don't even end up graduating. Instead of forcing lenders to lend to bad credit risks, let's come up with ways to support minority students so they aren't credit risks. I personally would be happy to invest in minority students studying CS, for example. And yes, it will be somewhat painful in the short term. We'll have to confront the reality that lending to students with low SAT scores to study esoteric subjects is maybe not a good idea. Perhaps it would even encourage such students to not waste their time and money on bad degrees.