Wednesday, August 05, 2009

 

Ask the Administrator: The Financial Panopticon

A new correspondent writes:

I recently applied and received an offer for a full time faculty position at the cc where I've been adjuncting for several years. This has been my goal for quite some time, and I'm thrilled that I'm finally moving past the rank of adjunct. However, I haven't yet done the paperwork, and I have one concern - credit. I understand that certain types of schools cannot hire individuals who have defaulted on student loans. I currently have a loan in default (though this position would mean I could rehab my loan and get my credit back on track). Do cc's run credit checks on new hires? If I am in default, is the cc likely to rescind the offer of full time employment?


First, congratulations on the offer! In this market, that's quite an accomplishment.

I'd be surprised if an offer already made were rescinded. Typically, employers do their due diligence (or not) before making the offer, precisely to avoid having to rescind them. Calling references, for example, only makes sense when you're trying to rule somebody out; once you've committed, there generally isn't much point. (Worst reference I've ever heard: "I'm calling to confirm a reference for so-and-so." "Who?" Ouch.)

My cc doesn't do credit checks, so I really can't speak to how (or why) cc's that do, use them. Your reference to "certain types of schools" is opaque, at least to me. I don't know what types those are, if any. I've never heard of it, and it's certainly nothing I've encountered in the cc or proprietary worlds.

The only hitch I could envision with student loans -- outside of, say, a fraud conviction -- would be if you got the loan directly from your alma mater itself. Colleges owed money by former students often won't send out transcripts for them. We won't hire anybody whose degrees we can't verify. In that case, failing to produce an acceptable transcript could tank your candidacy. But if your loan is from an outside party -- whether public, quasi-public, or private -- and you defaulted, I don't imagine your alma mater would refuse to send a transcript. Since we don't dig deeper than that, as long as the transcript and degree(s) are kosher, you're fine.

It's not at all clear to me why a cc would want to run credit checks on prospective faculty. I could imagine it for, say, comptroller or Chief Financial Officer positions. You wouldn't want someone who couldn't handle money to do those jobs, nor would you want someone facing personal financial crises to be directly in charge of large sums of public money. (That would be as ridiculous as having a Secretary of the Treasury who cheated on his income taxes. Oh, wait...) But I don't know why it would matter for, say, a history professor. The relevance is too indirect to be worth the hassle.

All of that said, though, I'm acutely aware that it's a big world out there. Wise and worldly readers, have you seen (or do you work at) colleges that apply credit checks to faculty? Does the correspondent have grounds for concern beyond transcripts?

Good luck! I hope you're able to use the job to get back on your feet.

Have a question? Ask the Administrator at deandad (at) gmail (dot) com.

Comments:
I had an on campus interview last year at a SLAC in the mid-south -- and I had to sign a form authorizing them to do a background check and a credit check. I asked and the HR person told me that they generally didn't do the credit check part, but I thought it was weird, nonetheless.
 
How bizarre. So someone defaults on a loan, usually because of money issues. Getting a better job would, probably, help resolve the money issues. Yet a prospective employer won't hire someone whose money problems caused him/her to default on a loan? The logic used nowadays to justify things is just amazing.
 
If the job requires a security clearance, like doing DOD research, it would matter, as most western traitors are motivated by cash.
 
I'm teaching at a cc this coming year, and indeed they did both a credit and criminal background check. I warned them that the credit check was not going to be pretty -- criminally, I'm clean. Whew.

Believe it or not, student loan debt tends to not show up on credit checks via the standard credit checking agencies. It can, but typically the dept. of ed. has to take certain (usually punitive) steps to ensure that.

As to why various non-financially sensitive employers, including colleges, are running credit checks, that remains a mystery.
 
@SL:

Uh, you might want to clarify what you mean when you claim that "student loan debt tends to not show up on credit checks via the standard credit checking agencies."

Who are the "standard credit checking agencies"? If you're referring to Experian, TransUnion, and Equifax, those are credit reporting agencies (aka credit bureaus), not checking agencies. (I make the distinction because the prospective employer will hire someone to do the background checks. The hired organization might be the "standard" credit checking agencies, but there are so many of them, that I have no idea who they are.)

And, as far as it showing up on the likes of Experian, et al., the four lenders I used to borrow money for my undergraduate and graduate education have no qualms about reporting my almost-six-figure debt. Somehow I doubt the DOE is taking "usually punitive" steps to make them report, as my loans are all current. The only thing that doesn't update is my Perkins loan.

So basically, I think you're spreading misinformation by claiming student loans don't usually report. That may be true for some subsets of lenders, but "student loans" is simply way to broad of a category to claim that "all" or "most" loans don't report, especially considering that one of my lenders is Sallie Mae.
 
As to "why" colleges run credit checks, etc. . . . the answer is obvious. CYA. Somewhere along the line a risk management consultant or lawyer told them they could be liable if a thieving employee turned out to have had a suspicious past that the institution could have learned about if they had checked.

The "worst reference ever" happened to me. I was right out of an abortive attempt at grad school and was applying for an IT job at a college. Since I spent 3.5 years of college as a student worker for my alma mater's IT department, getting some references from there seemed like a good idea.

I was taken aback when, a couple days after interviewing for the job, I got a call from my prospective boss. He told me they weren't successful at getting EITHER of my references. One said basically, yeah, he's good, but I don't have time to talk to you. (Apparently they were in the middle of some kind of major upgrade.) The other couldn't remember me--"Who?"

Now, I had not been in touch with either of these people for the two years since graduation, but I had emailed them less than a month prior to this to remind them of my existence, tell them about this job, point out how great I thought my college job had been at preparing me for something like this, and ASKING THEM IF IT WAS OK TO USE THEM AS A REFERENCE. (Both said yes.)

The fact that the folks running the search decided there must be "more to the story" and contacted me to give me a chance to give them another couple contacts has to be one of the nicest things anybody ever did for me.
 
Yes, I meant the standard credit checking agencies -- transunion etc. It's true that if someone or some hired agency or company is doing something more extensive, student loans will indeed show up. This is how it works in, say, the mortgage industry where the background checks -- assuming a reputable mortgage lender -- are more extensive.

My (possibly erroneous) assumption was that cc's and other academic institutions aren't going to delve much farther past the level of transunion and the like.
 
Elizabeth, that is an uncommon but sad catch-22 for prospective lawyers-- you can't practice without a bar card, you can't get a bar card without a character & fitness check, and too much debt in default means you don't have the appropriate character & fitness to get a bar card. See, e.g., http://www.nytimes.com/2009/07/02/business/02lawyer.html

{With lawyers, it makes a bit more sense, since the job involves being trusted with client funds.}
 
This is why I love academics (the field and the people). In every industry job interview process, and about half my non-profit or government interview processes, I have had my credit checked. That said, more than just your score is reported--so the potential employer can make a judgment as to the difference between a student loan and overzealous use of pre-approved credit cards.

Frankly, I'm more comfortable with this information being used to judge my long-term character than my choice of pants or a skirt in the interview. . o O (If I wear my hair up, will they assume that I will grade the students harder?)
 
Get in touch with a consumer credit agency; the rules are friendlier for folks with jobs.
 
@SL

You're wrong when you say that student loans don't show up with the "standard credit checking agencies." Again, they (Experian and the like) are called consumer credit reporting agencies, more colloquially, credit bureaus. (NOT credit checking agencies.)

And all of my student student loans, save a $2000 perkins loan that was issued by the school. Maybe, just maybe, the stuff issued directly from the Department of Education doesn't show up, but you are absolutely wrong to make a blanket statement about student loans not showing up unless "more extensive" checks are done.

A vast majority of non-DOE student loans *will* show up on a standard credit bureau pull. You are providing serious misinformation if you tell your real life friends/colleagues not to "worry" about student loans during a credit check.

And for anybody that really cares about what's on your report, you can a free copy from each bureau every year.
 
Can't comment on the colleges re: credit checks, but my student loans certainly showed up on a simple credit check for an apt. in nyc.

Almost lost the apt, not because I wasn't paying on the loans, but because it added to my debt/income ratio and made me look overextended.

Those loans show up on all 3 major credit reporting agencies, reported by the banks/lending institutions carrying the loans. Even worse, I consolidated, and the old lenders are still listed as well as the new lender, so it makes my credit reports very long and difficult to read.
 
Actually, it is extremely unusual for lawyers to be denied admission to the bar simply based on credit. Which is why when it happened to the one guy, it made the NY Times and a lot of other papers. (And, for the record, the man in question is 47 years old, had $400,000 in student loan debt based on 32 loans taken out over a period of 26 years, and has never made one payment).
 
I work at a high profile private university as non-faculty. We also had credit checks. But from what they said, it was more like one more piece of paperwork to put in my personnel file to show that they did their due diligence. Not that they would not hire someone based on low credit rating.

Also, I agree with Anonymous 7:46 AM and 10:33 AM. My student loans were originally with a bank and the gov't. I consolidated at one point, and now they have been in the hands of all sorts of agencies and companies (gotta love it when your loan is sold and no one tells you!).

All of the agencies/banks/companies that held my loans have shown up in my Transunion, Experian, and Equifax reports. I've also had the problem of explaining that the "multiple" loans are actually all the same loan.
 
All of the agencies/banks/companies that held my loans have shown up in my Transunion, Experian, and Equifax reports. I've also had the problem of explaining that the "multiple" loans are actually all the same loan.

And isn't that the kicker:

The people requesting the reports sometimes have no idea how to read and interpret them!

If the HR cog vetting your file can't parse out the mess, how often will someone get circular-filed?
 
I was the original correspondent. Thank you, Dean Dad, for posting my query.

What I meant by "certain types of schools" was technical/career schools. I had applied for adjunct work at a technical school, and their standard application stated they could not hire anyone with defaulted student loans.

As for my full time position, I'm glad to say there was no credit check, and I'm happily moving into my new office!
 
Anon author - congrats on the job!

Just my 2 cents about Second Line's comment on credit checking agencies... I don't know about the "checking" agencies but all of the credit reporting agencies I ever used have every one of my loans with similar issues as others mentioned when the loans were consolidated and (then) sold to other companies. Half my report is student loan related.
 
Talk about synchronicity...

From today's nytimes.com:

"Another Hurdle for the Jobless: Credit Inquiries"

http://www.nytimes.com/2009/08/07/business/07credit.html?partner=rss&emc=rss
 
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