Credit scoring for HE dummies

Credit scoring is a fine art - evidence based and statistically sound it is used by banks and other finance providers to limit the risk of bad debts to accord with the risk appetite of the lender.  It is possible to pre-authorise and instantly sanction loans for individuals based on public information, information volunteered on application forms and so called "behavioural" data that banks and finance providers share with each other (number of credit cards held, repayment record etc.)  For some basic guidance on credit scoring look HERE.

Credit scoring does not work well where there is a lack of information about individuals - such as countries without robust registers of births, marriages, deaths, passport issuance, electoral eligibility etc.  Nor does it work well where the banking system is mainly cash based.

But where it can mine good quality information it can support risk judgements and credit availability with a high degree of precision.  Credit scoring is also predictive - it is future performance of loans that banks are interested in after all.

So, let's think of applying this principle to another area where there is robust and plentiful information about individuals, where reputations and even financial solvency can depend on making the correct decisions - Higher Education.

The following is a suggestion for a basic credit scoring template for undergraduate students:

CREDIT SCORING FOR UNDERGRADUATES

HE institutions are increasingly measured via metrics that purport to reflect "satisfaction" or "quality" and the media gleefully put institutions into league tables.  Well, here's a way to ensure that the key metrics embraced by TEF such as Student satisfaction via NSS and DHELE data on "graduate destinations" are incorporated into a system that predicts graduate outcomes at the point of admission and afterwards.

HE institutions can set their own acceptable "score" - the maximum on the above illustration is 500 points - so Oxford and Cambridge could accept  400 points on entry, whilst Top 10 Universities could accept 350 - 399 etc.  Scores would change as the "behavioural" data on attendance and extra curricular activity were available and could be made available to employers (for a fee, of course) the media etc.

I asked in a previous blog whether HE institutions could borrow the principles espoused by the private sector - it appears that they can...