The most pressing economic issue flying under the radar of Silicon Valley is student lending, according to Ruth Porat, the chief financial officer of Google and its parent company Alphabet.
Google CFO Ruth Porat Thinks Student Lending Is the Biggest Economic Issue Tech Isn’t Tackling
Porat also talked financial crisis, Alphabet transition and diversity in tech.
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Porat named the issue when asked what tech companies are ignoring at the Vanity Fair Summit on Wednesday. Prior to joining Google in March, Porat served as CFO of Morgan Stanley. During that stint, she was part of the team advising the Treasury Department on the restructuring of housing lenders Fannie Mae and Freddie Mac after the crash.
Student lending now, Porat said, feels like housing lending did then. “What was clear was that this was a well-intentioned social program,” she said of government-sponsored home ownership. Yet the financial incentives and realities went awry, she continued. Good intentions, terrible outcome.
“Student lending has too many similarities to that program,” she said. “Seeing the second generation of this is something we need to keep on the agenda.”
Outstanding student debt now clocks in at $1.2 trillion, up from $600 billion in 2006, according to the Consumer Financial Protection Bureau. Some tech companies are trying to seize the problem; Credible, an online marketplace for student lending, raised $10 million last week.
Porat noted there is some space for tech solutions to the debt burden, but did not offer specifics nor suggest that Google is going to tackle student debt. Still, the company is flirting with financial products, like its mortgage calculator in search results. Google Inc. is also poised to invest in financial messaging startup Symphony.
That said, student lending was a pet issue for Porat well before she landed in Mountain View.
Her conversation on Wednesday ranged from the financial crisis to her career on Wall Street, as well as the Alphabet transition. Porat also weighed in on the dearth of diversity in tech. Critical to fixing the problem, she said, is “effective succession planning” in executive positions. “When you come in to say, ‘Who’s next?’” she said, “you better make sure there’s a women or minority.”
She praised Google’s commitment to addressing diversity, noting it was the first tech company to release its internal figures. However, she did not mention that, save Google’s Sundar Pichai, every CEO of the Alphabet companies (that we know of) is a white man.
This article originally appeared on Recode.net.
