The (Surprising) Link Between IQ Tests and College Debt

It’s become more and more common for the issue of aggregate student debt in America to be referred to as a ‘crisis’. Figures estimate that more than a trillion dollars in total American delinquent student debt, and approximately 10% of all debt in America, is repressing economic growth and the ambitions of those who are burdened by IOUs to Fannie Mae.

A story in the Wall Street Journal describes how, in the past five years, delinquent student loan payments have surpassed delinquent credit card payments for the first time in history. Delinquent is categorized as any payment that is at least 90 days late, and the Journal’s Josh Mitchell points out how this statistic alone grossly understates the problem. Half of the total student debt is held by those who are still in school, unemployed, or excused from currently paying back their loans for another unspecified reason. This massive demographic doesn’t even count toward the $1.4 trillion in estimated delinquent debt already on the record.

With this said, we hear frequently how dire the state of student debt repayment has become. But, what we hear less frequently is perhaps a more important question:

How did we get here?

An enlightening history by Mauldin Economics’ Patrick Watson (as part of the very-much worthwhile, free Connecting the Dots series) points out some historical decisions and milestones that have, essentially, made higher education unavoidable for the vast majority of those looking to make a decent living.

As we all know, college isn’t the exclusive experience that it used to be. University now serves as a sort of guaranteed right for virtually anybody who wants to attend an institution of higher education, in its many forms. But in the past, the university system served as a legitimate funnel to corporate and higher-paying America, a litmus test for who was qualified and dedicated enough to hack it in the professional world.

But, even before college became the proving grounds for hopeful professionals, there was a cheaper, more direct method: IQ tests.

Prior to 1971, many companies relied upon these tests as a critical tool in the hiring process. They would, it was thought, provide a window into how suitable a candidate was for a given job. However, eventually the courts would rule that these IQ tests – which, again, were an alternative far cheaper than a four-year, debt-financed education – were illegal. Despite the test not being the sole criteria upon which a candidate was judged, it was determined that some companies were using the tests to discriminate against certain minority groups, some of who tend to score lower by average.

The ruling in Griggs v. Duke Power Co. was the precedent by which American employers would be forced to abandon the practice of administering IQ tests and other job fitness tests to job applicants, categorizing such tests as ‘artificial, arbitrary, and unnecessary barriers to employment.’

In the case of Duke Power, the company’s five divisions, Labor, Coal Handling, Operations, Maintenance, and Laboratory and Testing, were stratified clearly by pay. And, black employees were resigned totally to the lowest paying rung, Labor, in which the highest-paying salary was less than the lowest paying salary in all the other divisions.

Duke Power was not punished individually. Instead, IQ tests and employment fitness tests as a whole were outlawed by the letter of the law. And thus, the era of university as the de-facto IQ and work ethic test for employers seeking qualified candidates was ushered in.

It’s interesting to note that, while employers are forbidden from using IQ tests in hiring practices, universities are permitted to use them when choosing to accept or reject an applicant. The SAT, ACT, and other graduate school entry exams are more reminiscent of IQ tests than not. And, they are deemed completely legal by the courts.

One could ask why, in the professional world, where adults with presumably more developed brains and intellectual potential reside, IQ tests are banned, while they are permitted in younger demographics seeking to enter university. After all, the gap in SAT and ACT scores are reflective of the same performance gaps that were used to deem professional IQ tests illegal. Sure, affirmative action has allowed many to pretend that those gaps aren’t there, or at least ‘make up’ for them by establishing different entry standards based on race.

But, the testing in and of itself has not been deemed illegal. Which is curious.

Keep in mind the massive ramifications of the Griggs v. Duke Power Co. decision, which was issued under the guise of the Civil Rights Act of 1964. The decision ultimately resulted in a system where everybody – aside from the Bill Gates of the world – would have to attend college, and in most cases take on some level of debt, in order to even have a chance at getting a white collar job.

And, based on what we now know about the ideological indoctrination incubators that most universities have become – not to mention the professional/collegiate testing double standard – is it fair to wonder if the Griggs decision was motivated in part by a desire to make sure every intellectually and professionally influential American would attend university?

There’s no proof of this, and there will never be a definitive answer. But, we do have a definitive result when examining the effect of Griggs vs. Duke Power. That result is debt, lots of debt. Debt that students ironically take on in the hopes of getting a job that will allow them to…pay off that debt.

In retrospect, IQ tests don’t sound like such a bad idea.

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