Posts
June 15, 2009
Student Debt, Fool’s Gold?
From the article...
I’m an academic advisor in natural sciences at a 4-year state school; day after weary day I advise students with below average grades who have unrealistic expectations and cannot accept the fact that — contrary to what they’ve been told all of their lives — they cannot be a scientist or doctor.
Virtually every day I advise one or more students with “C” averages in math, chemistry and biology who persist in the belief that they will get into medical school, all the while accumulating debt and wasting time. I don’t even really have the hope that one day they will wake up; I forget who said that “most people can’t stand too much reality.” — Chris Silber
From the comments...
These are heartbreaking stories. I knew from common sense that student debt was undesirable, but reading these comment threads has convinced me that we are in a horrific situation as far as our young (and some not-so-young) people are concerned.
It seems to me that one “root cause” of all this madness is the desire to remain middle-class. That simply may not be possible in these circumstances. Perhaps parents need to teach their children how to be poor - because that’s where it seems a lot of people are headed, if they have been unfortunate enough to fall into the net of usury. — stefanie
February 6, 2007
Bernanke: Education can help with income gap
WASHINGTON - Bolstering education and training — rather than erecting trade barriers — would help narrow the economic gap between low- and high-income workers, Federal Reserve Chairman Ben Bernanke said Tuesday.
How is more education going to help close the gap? I'd really like someone to explain that to me. Americans have embraced higher education over the last few decades in a major way. Has the gap narrowed? No. Note the yellow line in the following chart.
Gini coefficient
(Click to enlarge)
I'd also like someone to explain to me how taking on massive debt helps close the net worth gap, because I'm fairly confident that one is even further out of whack.
And lastly, here's a look at Tomorrow's Jobs.
Note the occupations with the largest numerical increases in employment, projected 2006-2016 (as seen in Chart 8).
1. Registered Nurses - 587,000 (Specialized Degree Needed)
2. Retail Salespersons - 557,000 (No Degree Needed)
3. Customer Service Representatives - 545,000 (No Degree Needed)
4. Combined Food Preparation and Service Workers, Including Fast Food - 452,000 (No Degree Needed)
5. Office Clerks, General - 404,000 (No Degree Needed)
6. Personal and Home Care Aides - 389,000 (No Degree Needed)
7. Home Health Aides - 384,000 (No Degree Needed)
8. Post Secondary Teachers - 382,000 (Doctoral Degree, Master's Degree, and/or Bachelor's Degree depending on the job)
9. Janitors and Cleaners, Except Maids and Housekeeping Cleaners - 345,000 (No Degree Needed)
10. Nursing Aides, Orderlies, and Attendants - 264,000 (Specialized Training Needed)
That's an additional 4.3 million jobs (in theory). A general college degree is not useful for most of the jobs, and mostly insufficient for the rest of them. I started this post with the idea that this makes me sad. I guess I'll end on that note too.
36 comments:
Wow Mark!
On fire today! Tons of content and I am just trying to catch up after getting in late.
The student debt thing has always boggled the mind. First off, if I can become a scientist (and one of the most prolific vector constuctors in practice) then it is liley most people can.
That said, I was number 7 out of a class of 500 in high school, but my fan=mily was poor like you read about. I went to the state college that had a great biotech program, graduated with a debt of $3000 and the rest is history. I cannot imagine what graduation from college owing more than $100,000 (easily $200,000 here in massachusetts). Even if you make more, more is going out the door. I have averaged 12% pay raises in my 11 years on the job, so the income disparity between me (BS degree) and an MS is negligible even after plenty of time goes by. As usual, it is up to the individual and no degree can make up for no talent. Well, unless you work at the FED or Treasury, then you better have an ivy league degree on the wall.
PS thanks for the nice note today via email.
WASHINGTON (Reuters) - President Barack Obama said on Tuesday that worrying about the U.S. government's finances "keeps me awake at night" and the country needed to start planning now to tackle soaring deficits.
Well the least he could do is stay awake at night feeling gully about throning the American people under the bus. But Noooooooooooooooooo! He's staying awake trying to figure out just when to let them know the SS and Medicare are history, taxes are going to the moon unless your a banker and the inflation genie will take care of the rest of it and if that don't work send thier kids off to war just to get them off the streets.
Bastard!
Kevin
Kevin, Obama can swat flies, so anything is possible! Why cant you just believe in change we can believe in as we limp through this world in disbelief? Get on board!
GYSC
I am on board unfortunately whether I like it or not and they didn't even ask if I wanted a window seat.
Kevin
GYSC & Kevin,
I am on board! Literally!
It's a plank and I'm walking it. Normally I'd be upset but the plank is the only part that didn't sink when we hit that iceberg. Would you believe some actually tried to bail her out? They were down in the engine room. Yeah, they started under water and ended there too.
So it's just me and this board, floating endlessly on the sea of despair. I'm keeping my spirits up with heavy doses of dark sarcastic gallows humor. It isn't all bad though. If it was all bad then at least I'd know it couldn't get worse, lol.
Thanks for your information:)
Stag,
I am on board!
How many can actually afford room & "board"?
http://finance.yahoo.com/focus-retirement/article/107198/Saving-Early-for-College-Pays-Later?mod=fidelity-buildingwealth
With the cost of college so damn high, is it any wonder we have shamflation? Seriously, how else can Ivy Leaguers pay back their student loans?
To make matters worse, Harvard, Yale and all the other big endowment schools are major rent seekers. Not investors, credit inflation gatherers. Again, is it any wonder we have shamflation?
Makes me sad too.
Jack,
Thanks for leaving a comment. Much appreciated. :)
mab,
I grew up middle class (because both my parents worked) in a small farming community. Attended a small "cheap" university not far away. Won a scholarship that paid all my tuition. Lived with my parents through much of it. Took the bus to get there and back most days. Worked as a research assistant that last year. Graduated with no debt in 1987 (other than the support my parents gave me). Bought a new Hyundai on credit and had about $500 in cash. Moved to Seattle. Got a job. Paid the car off early. Drove it 9 years anyway. Bought a Camry in 1996. Bought my first house in 1997. Paid off the car and house in 1999. Bought my parents a car. Retired. Still driving the Camry. Still own the house. Still spend money like a frugal college student.
Had I taken on Ivy League debt loads I doubt very much I'd be better off right now. It took education to earn money, but as the saying goes, it also takes money to earn money. Debt is a burden best removed as soon is is humanly possible. If opportunity comes knocking when you are deep in debt, it will most likely be the bank and/or the bill collector. Sigh.
June 17 (Bloomberg) -- The cost of living in the U.S. rose less than forecast in May, culminating in the biggest 12-month drop in prices in almost 60 years.
http://tinyurl.com/maewp3
Uh-Oh
I'm sure that eventually Benny and the inkjets make sure that little trend gets reversed even if it means destroying what purchasing power Bucky still has.
Kevin
HARARE, June 17 (Reuters) - Zimbabwe's consumer prices fell for the fifth month in a row in May, declining 1.0 percent month-on-month compared to a 1.1 percent fall in April, the Central Statistical Office (CSO) said on Wednesday.
http://tinyurl.com/lhlyht
Uh-Oh the end must truly be near.
One comment included: "...I now owe $102 thousand dollars. Given my age (54), my income/occupation, and the amount I owe, the loan can never be repaid;... In 1998, “reform” of bankruptcy eliminated the seven year rule, and just about every other bankruptcy protection that existed for student loan debtors..."
That sounds like retrospective legislation; isn't that unconstitutional?
"This has brought relief to consumers and helped snuff out what had become the world's highest inflation rate, which hit 231 million percent last year in June."
Just when you think the Understatement of the Year Award is locked, something like this comes along, lol.
When inflation drops from 231 million percent to minus one percent, it actually brings relef. Good to know!
dearieme,
I did find this, for what it is worth.
http://books.google.com/books?id=rd0VnjWZCvoC&pg=PA364&lpg=PA364&dq=retrospective+legislation+united+states&source=bl&ots=i1Hp992rJv&sig=Gx_qTUbK3gfi2VZJ9wIia_uYD8E&hl=en&ei=piA5Su6VOJC4swOoqKD-Bg&sa=X&oi=book_result&ct=result&resnum=1
"272. Retrospective Legislation.
...
These prohibitions found in the state and federal constitutions are construed as referring only to statutes relating to the punishment of a crime."
NEW YORK (Reuters) - The benchmark S&P 500 index .SPX should surge back to its October 2007 record above 1,500 by the end of 2012, provided the U.S. economy sees a V-shaped recovery, JPMorgan Chase Chief U.S. Equity Strategist Thomas Lee said on Wednesday.
http://tinyurl.com/nrgr2b
Yahoo! get on in there and get you some of that.
"The biggest risk is that we're implicitly assuming the consumer is stabilizing. There's a lot of potential shocks. If oil goes to $100 a barrel, you can't have a recovery," said Lee, adding the other risk would be if savings rates somehow overshoot.
Uh-Oh he would have to go and put that in there. Assuming something won't happen doesn't have a very good track record of late.
Kevin
Thank you, Mark.
"No bill of attainder or ex post facto law shall be passed." No mention there of criminal law. How shameful to lock debtors into their debts retrospectively.
Kevin,
There's nothing to worry about!
I should probably mention that my limited analysis of the situation implicitly assumes that there is nothing to worry about.
dearieme,
It's like a debtor's prison, only the prisoner is required to keep working (with rising unemployment), stay healthy (because he can't afford insurance), and find his own food.
Stag,
Bernanke: "It is not the responsibility of the Federal Reserve - nor would it be appropriate - to protect lenders and investors from the consequences of their financial decisions."
Addendum: Except for systemically fraudulent banks!
WASHINGTON, June 18 (Reuters) - U.S. Treasury Secretary Tim Geithner urged Congress to act quickly on the Obama administration's regulatory reform proposals, saying past efforts had started too late after the will to act had faded.
http://tinyurl.com/lzqj9d
It took congress about 25 years to undo all the legislation that was put in place in the 30's so this wouldn't happen again and now all of a sudden passing legislation that will fix absolutely noting has to be done quickly just like the bank bailout. Watch your wallet because were about to get another good fleecing.
Kevin
mab,
"It is not the responsibility of the Federal Reserve..."
The Dog's of the Dow ate their homework! Have no fear though. None of those dogs can do it again. AIG, Citigroup, and General Motors aren't in the Dow any longer.
Kevin,
"Watch your wallet because were about to get another good fleecing."
Oh crap! Someone replaced what was in there with paper IOUs! Holy...
Oh wait. My bad. That's our currency, and to think I almost panicked.
Stag,
Check out this CONgressional spending bill:
http://news.yahoo.com/s/ap/20090618/ap_on_go_co/us_congress_war_funds_24
I guess that's "change". It's certainly not chump change.
Oh well, at least it's "off" budget. Our budget deficit is high enough already.
Mark,
I have a ripper up tonight and would like your ideas on the last section if you have a minute.
Take care!
mab,
"Oh well, at least it's "off" budget."
One of this nation's fastest growing industries makes its money off of "off budget" consumers. I wonder if payday loan company growth will be impacted by a contraction in actual paydays though.
GYSC,
As I type this CNBC is talking inflation vs. deflation yet again. There are certainly plenty of rational arguments for both, which as a saver is about the only optimistic thing I can say these days.
Numbers On Welfare See Sharp Increase
http://tinyurl.com/mdwr6m
Goldman to make record bonus payout
http://tinyurl.com/llxvd4
The US two class welfare system. One group is eating rice and the other is having a 10 course meals.
Kevin
Kevin,
"A lack of competition and a surge in revenues from trading foreign currency, bonds and fixed-income products has sent profits at Goldman Sachs soaring, according to insiders at the firm."
This surprises me. You'd think that with all the foreign currency trading ads on TV Goldman Sachs would be facing plenty of competition. Is the average investor given all the tools to "trade like a pro" or not? And what about the ability to backtest trading strategies a full 10 years? Surely that must give the little guy a huge advantage over Goldman Sachs.
Nothing quite like starting the day in a most sarcastic way!
Mark,
I post my sarcasm over at:
http://www.whitehouse.gov/contact/
Along with that I added:
"It might be a good time to hit up your banking pimps for some campaign contributions seeing how they are looking pretty flush."
I'm probably on a terrorist list by now.
LOL
Kevin
Kevin,
"It might be a good time to hit up your banking pimps for some campaign contributions seeing how they are looking pretty flush."
HAHAHA!!!!
Mark,
here as today's sarcasm posted on my favorite site:
http://www.whitehouse.gov/contact/
Obama: Health reform needs public insurer option
"If private insurers say that the marketplace provides the best quality health care; if they tell us that they're offering a good deal, then why is it that the government, which they say can't run anything, suddenly is going to drive them out of business? That's not logical," he said. "They should be able to compete."
http://www.reuters.com/article/bondsNews/idUSN236958020090624
You know this but we'll go over it anyway.
#1 The private sector doesn't have the FED's printing press, and unlimited taxpayer resources to squander.
#2 The private sector insurers don't provide health care, doctors do, insures are in business to make a profit by pricing in risk of payout with income from invested premiums. It's called capitalism.
#3 The private sector insurers have to match prices with risk of loss, something the government wouldn't do. Just look at the GSE's and the trillion dollar hole that is going to blow up and land right on the governments balance sheet in the next year or two.
This country is going broke and sooner are later the currency will collapse or the Treasury market will blow up due to all this spending and it won't matter anyway but hey what a way to go.
Are you all gonna cover boob jobs?
Kevin
Kevin,
"This country is going broke and sooner are later the currency will collapse or the Treasury market will blow up due to all this spending and it won't matter anyway but hey what a way to go."
That's worthy of a poem. ;)
http://www.stopshrinks.org/reading_room/zpoems/forward_tense.html
Mark,
It may have been poetic but seriously where is the money going to come from to pay for this with one out of 6 Americans income coming from the goverment now and 10% unemploment which will most likey increase more when this goes threw if the increased cost can't be passed threw to the end user.
1. raise taxes, 2. just borrow more 3. just print money.
If it is mandatory that every citizen has health care what about the illegals which currently can't be denied emergency treatment and is part of what has driven cost threw the roof in California.
I doubt they are going to let them just bleed to death on the streets.
Maybe this is going to be the new bubble a hospital and clinic on every corner to fill all that empty retail space.
Health insurance is about 20% of my annual expense with my ex-employer paying part of it but if they are gonna tax the crap out of me because I have it I'll drop it like a hot turd and jump on the government subsidized money loosing one in a heartbeat.
It's gonna suck when it blows up though.
Kevin
Kevin,
I hear you. Right now I am retired and pay all of my own healthcare. I'd clearly be a winner in the new system. Everyone can't be a winner though. It's still a zero-sum game for the most part.
Looks to me like the US Worker will need to be the loser (through increased payroll taxes) and/or the US Taxpayer will need to be the loser (through increased unsustainable national debt).
Overall, I'm guessing that this should make me a net winner and the typical US taxpaying worker a net loser. Figures. The same thing happened with the capital gains tax cuts. It allowed me to sell all my stocks relatively pain free before the stock market crashed.
I must have a financial situation similar to those in power. The government keeps sending aid my way even though I don't need it. Let's see. Retired early. Decent net worth. I can certainly see why some Congressmen would want to help me. Sigh.
Need one more entry in Tomorrow's Job:
Walmart Door Greeter - 150,000,000 (no degree, or any skills needed).
The Real Deal,
That's fantastic news! That's a LOT of jobs!! I feel almost silly for thinking the future wasn't that bright. ;)
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