...are we really proposing that banks only fund certain degrees based on a correlation?
Isn't it at all possible that people with certain aptitudes and skills are attracted to particular degrees that also happen to correlate with more career success?
It's more that the market a) bear the cost of defaults and b) be free to price debts correctly based on whatever information (minus protected classes i.e. race, sex, etc) they want.
If one lender decides to factor in major, SAT/ACT, high school grades; then maybe they'll make some money maybe they won't, but students can shop with another lender. If every lender does, then those factors are necessary for pricing the debt correctly.
I'm not saying they should keep lending, I'm arguing that this notion of "employable majors" in university, which is often talked about here, is deeply flawed and wholely impracticle.
It's not a simple fix because it's not a simple problem. I liked your suggestion of a business plan as well. I just really don't like the system of guaranteed loans that we have right now. I think if the government stops guaranteeing loans, and we make loans bankrupt-able like any other debt, then we will force banks to be more particular about who they give loans to. They'll have to follow similar policies that they use for other kinds of loans, and I'm simply guessing (as someone who is not a lender) that they would want to include many factors in the approval process, which includes major.
I certainly don't think the government should legislate how much students should be able to take out in loans based on major, though maybe they should put a hard limit based on the degree level. For example, maybe the hard limit to borrow for a bachelor's program is $50k (or some value that is more appropriate). That would take out those who go overboard on the far edge of the bell curve.
You're kind of stuck between a rock and a hard place.
On one hand, the current system of allowing teenagers to take on enormous debt that can't be discharged in bankruptcy for degrees ostensibly for career choices that most don't even remotely understand, is OBVIOUSLY a total disaster.
However, limiting funding puts you right back into a position where only the very wealthy can afford to attend the best schools, which structurally segregates the population, reinforces a class system, and promotes wealth inequality.
Also suboptimal.
There are cases where brilliant-but-broke kid A takes out 6 figure loans to go to an elite Ivy League school, hustles their ass off, networks like crazy, and uses that education as a launching pad to truly great things.
The challenge is that at 17, people aren't fully formed, and often it's the university experience itself that's so shaping of who they will become professionally.
To me, it's not so much about identifying in advance who will be successful or what degrees will lead to success, because we really can't predict such things in a population of teenagers.
The options range from making education more affordable, like other countries do, OR to systematically change the way education is understood.
If we stopped telling kids to get degrees so that they can get good jobs, which is nonsense anyway, if we started teaching them the realities of what degrees can and cannot do for them, and that building a career is a whole other process, then just maybe, they would be better equipped to actually utilize their educational experience better.
The "I have no idea what I want to do, and I'm not super motivated to hustle" students might choose cheaper schools or trade school, or no school.
The "I want to study obscure literature because it's what I truly love, but dammit, I'm going to hustle every second and network my brains out to find a way to turn that into a solid career" students might still go into massive debt, but they might understand that it's going to take a lot more than studying to make that investment pay off.
Kids aren't stupid, they just don't know what they don't know, and it really wouldn't take a lot to illuminate them as to what a degree can and cannot do for them professionally, which could really help them and their families make more appropriate decisions. More importantly, it could open their eyes to seeing that studying is only part of the work of getting the most out of 4 years in school.
I was lucky, I had family in staffing telling me about all of the grads (even STEM grads) begging them for min wage retail jobs because they had absolutely no work experience and were under the misapprehension that a degree alone would make them highly employable.