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Contact: Daneil Mazone,  Media Relations, 215-574-7163

Philadelphia, PA — A closer look at student loan research shows that multifaceted solutions are needed to address the growing student debt issue, Federal Reserve Bank of Philadelphia President Patrick T. Harker said today in remarks at the Wharton School of the University of Pennsylvania. “Changing our approach to how we invest in education and training won’t take care of the entire student debt issue, but it can help those who are disproportionately affected by it,” Harker said.

Larger loans tend be taken on by people attending four-year institutions, but research indicates that those students have better job market prospects and are better positioned to pay off their debt. Students at for-profit colleges or in two-year programs are generally in school for shorter periods of time and take on smaller debts. However, a significant portion of these students are unlikely to finish their degree and also experience poorer and more uncertain job market outcomes, and are thus more likely to default on their loans.

These trends point to the fact that the same track will not yield financial success for everyone; different educational paths fit different goals. “The thing is, we don’t all need or want the same educational track. A traditional four-year degree is great for some people,” Harker said. “For others, it’s not necessarily the right path. And we should stop making people feel as though they all need to fit into the same mold.”

Research from the Federal Reserve Bank of Philadelphia indicates that alternative routes to education and professional readiness can lead to better financial outcomes for students pursuing certain types of careers. These jobs, coined “opportunity occupations,” pay at or above the national median income, but don’t require a traditional four-year degree. They make up close to 30 percent of the job market nationally. “If we reconsider the way we train people, especially for occupations that require special skills, we can start to maximize the potential of our workforce,” Harker said.