Miscellaneous money issues & race

Last week I blogged about “Ban the Box” about a movement advocating that questions about an applicant’s criminal background be eliminated from employment applications.  According to Michelle Singletary of The Washington Post such screening disproportionately impacts blacks and Hispanics. 

Today I read an article from the June 12, 2013 edition of The Wall Street Journal entitled “Employment Checks Fuel Race Complaints.”  The article is written by Scott Thurm.

This article, like Michelle Singletary’s column, discusses the EEOC filing complaints against two employers (Dollar Tree and a unit of BMW) alleging these employers, in effect, screened out for consideration job applicants with criminal backgrounds. The EEOC asserts such policies disproportionately discriminates against black applicants.

[As an aside, I don’t know why Michelle Singletary’s column mentions the impacts on blacks and Hispanics but The Wall Street Journal articles mentions the impacts on blacks only.  This is why one should read more than one news outlet!]

According to The Wall Street Journal the EEOC issued guidelines to employers on this matter last year after a unit of PepsiCo agreed to pay $3.1 million and change its screening policy to settle charges that the company discriminated against blacks in hiring.

[Full disclosure: The Money Heifer owns PepsiCo stock but wasn’t aware of this matter].

The [EEOC] guidelines don’t bar the use of criminal checks, but urge employers to consider the crime, its relation to an applicant’s potential job, and how much time that has passed since the conviction.  The guidelines recommend that employers review each case individually, and allow applicants to show why they should be hired despite a conviction.

The article later notes that an attorney from the NAACP Legal Defense Fund praised the EEOC lawsuits against the two employers as an important step against workplace discrimination.  “People who are trying to work, trying to be productive citizens, are being blocked from jobs” on the basis of an old conviction though such applicants pose little danger.  This attorney further declared these guidelines about the use of criminal background checks “are particularly important because blacks are convicted of crimes more often than whites.”

I juxtapose that last sentence with another article I read over a week ago.  A couple of organizations lodged a complaint against a federal judge who purportedly stated at some presentation that blacks and Hispanics are more likely to commit crimes or words to that effect. 

What’s ironic to me is that you have organizations complaining that blacks are been screened out for consideration for jobs because they have a higher rate of criminal conviction AND, on other hand, organizations complaining that a judge labeled blacks and Hispanics as being more prone to commit crimes (or words to that effect).  When you consider the two news stories side-by-side, odd, isn’t it? 

And then a third story from today’s Washington Post.  The article, written by Nick Anderson, is entitled “Loan rules bring pain to black colleges.”  So, what’s the pain?

Apparently in October 2011 the Education Department “tightened the screening process for loan applications to ensure that certain kinds of unpaid debts were considered in a review of a parent’s credit record.  That made it more likely that some applicants would be deemed to have an ‘adverse credit history’ and therefore ineligible.”  This tighter screening process had the unforeseen consequence of disproportionately disqualifying black parents from receiving loans to help fund their child’s education.

For all colleges nationwide, the dollar volume of federal loans approved for parents in the 2012-13 school year fell 11 percent compared with the total in 2011-12. . . .


For historically black colleges and universities (HBCUs), the parent loan volumes fell 36 percent.  That translated to an annual cut of more than $150 million.


The figures suggest that tighter underwriting standards affected many colleges and universities but had a disproportionate impact on schools, such as HBCUs, that serve a high share of disadvantaged students, compared with affluent peers, are more likely to have parents with checkered credit records.

I believe the tighter lending standards are a good thing.  Have we, as a nation, not learned from the housing crisis?  As Secretary of Education Arne Duncan remarked, “we don’t want to put families in a financial situation they can’t recover from.  That’s not right.”  Another individual was more blunt.

“Having created a new class of student debtors, higher education is now reaching back in time to indenture the preceding generation, ” Kevin Carey, an education analyst with the New American Foundation, wrote this month in the Chronicle of Higher Education in an essay headlined “The Federal Parent Rip-Off Loan.”

Dave Ramsey says one should not borrow to obtain an education.  Some may think that is too extreme.  But, if one doesn’t graduate with student loan (or credit card debt), think how much freedom the college graduate has without the stress of debt.

More to the point is Suze Orman. She says parents should never borrow to fund their child’s education.  Will the parents be financially stable come retirement?  Will the parents have to turn to their children for financial assistance?  Suze reminds parents = you cannot borrow for your retirement.  Her advice is the child, and only the child, should borrow for his/her education [of course, it is preferable not to borrow at all].

Some students and their parents may not like what I have to say but if the student cannot afford on his/her own to pay for school, consider a less expensive school, attend a community college, work full-time and go to school part-time, etc.  Break the cycle of the checkered credit record.  And, don’t burden your parents further.

Meanwhile, colleges and universities, both HBCUs and non-HBCUs, need to seriously look inward.  Tuition has doubled on average over a 10 year period but wages have not kept up.  Today more individuals are foregoing college because it is too expensive and people don’t want to be shackled with debt for a significant portion of their post-college lives.  Something needs to change.

And something needs to change among black Americans so they are not disproportionately impacted by criminal background checks or tighter lending criteria.






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