Too bad we have been unable, thus far, to make the same connection that folks are making to Fannie Mae (and Sub-prime) lending and the housing market and student loans and the outrageous cost of tuition with health insurance and the outrageous cost of medical care.
It is utterly depressing that there are so many people like her facing decades of payments, limited capacity to buy a home and a debt burden that can repel potential life partners. For starters, it's a shared failure of parenting and loan underwriting.
But perhaps the biggest share lies with colleges and universities because they have the most knowledge of the financial aid process. And I would argue that they had an obligation to counsel students like Ms. Munna, who got in too far over their heads.
Failed parenting? These are the parents from less well off backgrounds that fought through the system to get their kids into one of the "top" colleges. These are the parents from working class backgrounds that stayed up countless nights after work to help the kids with their homework. These were the parents that were determined to give their kids opportunity.
"Failed parenting"? These parents and their kids were led to the slaughter by the outrageous snobbery of the establishment institutions, and these institutions were more than capable of calculating the economic benefit of their sheepskin. (The sad fact that this young woman was silly enough to seek a degree in, get this, woman's studies (LOLOLOLOLHAHAHAHA! is that a SCREAM??!! Who does she think she is - ANITA HILL??!! Sorry, that got away from me...) does not excuse the system - that system just is what it is... a horrible, debt creation and enslavement program.)
I am a career finance guy, it was a no-brainer for me to see this. Asking a mechanic to see this is like asking me what's wrong with your car.
And the line about "repelling life partners"? I can tell you from experience that marrying into a massive student debt is a serious burden on a young couple/family trying to get a start in life... after all, people with student debt don't exactly have family money to make a mortgage down payment with, or to help in an emergency or job loss. These are the kids that are on their own from a young age. To harm them in this fashion is simply despicable, but the "elite" schools ran out of wealthy suckers... somebody has to keep the elite in blazers and mocha frapachinos...
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The U.S. is between a rock and a hard place vis a vi B.P. and the GOM Oil and Nat Gas production. If you think fisherman are suffering in the GOM, "you ain't seen nothing yet". The decrease in production in the GOM from drilling bans and FEAR that if you make a mistake you might wind up indicted by the Federal Government is going to have a significant effect on the local economy. There is NO OTHER INDUSTRY to speak of in the GOM. Every business, large and small, can thank the offshore Oil and Gas industry for all of the money coming into the region (with the exception of Government transfer payments, the taxes for which come from the payrolls of the Energy industry and their support industries).
Further, if I am correct in my assessment that with the GOM producing 15% to 18% of U.S. Nat Gas, and a larger portion of non-Alaska Oil, the contraction in the rest of the U.S. economy will put a lid on employment expansion within 12 months.
We have painted ourselves into a corner. Sometimes luck is with you, and sometimes it is not. An Oil supply problem elsewhere in the world, or an L.A. earthquake or a major hurricane hitting Miami (or any other big city on the east coast) and the U.S. economy will really find out what its made of given a significant contraction of domestic Oil and Nat Gas production.
But at least the administration is going to hang a few of the engineers on the Horizon platform, and maybe an executive or 2. But Government Sachs? The folks that nearly destroyed the financial system? Off scott free, probably to buy the assets of what is left of B.P.
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10 comments:
I spent 4 years working at Colleges/Universities previously. I saw many students whom would walk out the door and struggle because of financial debt obligations and lack of job prospects in line with their wishful thinking and irrational optimism. One of my jobs was as an academic advisor for liberal arts students, and undecided's. I got in hot water with a couple parents, when I counseled the students to consider transferring to a community college to save money, and the re-apply to a 4 year school if/when they had a better idea what they wanted and were more serious about their studies. This college sucked in massive amounts of students for Forensic science majors, because the kids "loved CSI" yet there are almost not jobs out there nationwide. Additionally, many students who otherwise seemed intelligent and parents as well, would get excited about degrees that had about zero job prospects and the students abilities (such as a utter lack of math skills, and science background--yet they were going to be forensic science students and have to go through advanced Chemistry and Calculus, although they got C's in high school algebra?!!) did not pair up.
I again say rational optimism with discipline, hard work is a good thing, what this culture promotes--magical thinking, irrational optimism, and the "debt doesn't matter" thinking with College being different is insanity and will continue to lead to a lot of economic wreckage and misery. It's sort of like Bartlett video on exponents, I swear people really don't understand interest, compounding interest and the like. If they did perhaps expensive colleges and 30 year mortgages wouldn't look so good, and more people would save money and work as you go and take on far less debt.
-Meiyo
In many cases, young people--if they are one of the lucky ones who can can get a job at something like Starbucks--can't make enough money to service their student loans and pay their other bills. And we are expecting them to fund Social Security/Medicare outlays.
I predict that it is only a matter of time before we see the "Student loan march on Washington."
ingAs a grad of one of the better (haha) universities, who got a job right out of college, and have remained in this blasted office for 21 years, I will say this ...
1) The only way any business, educational or otherwise, can succeed these days is being somehow connected to government (esp. Federal) funding. For those of you scared to death of socialism/communism, it is already here. We pay, you march.
2) I don't think it matters too much what major you choose, as long as you FINISH. You have to FINISH. When you finish, you have your job certificate that says you will do work that you don't want to do. Then you can then "learn on the job" because you know how to read and understand detail, write decently, can prioritize and ensure completion of assignments. What major you have means very little, even "religious studies." My job has nothing to do with my major.
3) Since the average non-supervisory working person hasn't had a pay raise in 30 years, except for inflation, we shouldn't be too surprised that people are using credit to fill the income gap since the 1970s. The for-profit education industry was brilliant. Take desperate people/students and give them a "path" to the American dream .. pay for it later.
4) I know several younger Latinos who have heard the siren's call, and have attended or are attending for-profit schools, to become veterinarians ($250,000 in the Caribbean), hair stylists ($30,000 at Mario Trichoci), IT systems installation ($120,000 at DeVry), and nursing. What were these guys supposed to do, when the jobs all went to China? They were duped, and they thought they had no choice.
Uncontrolled debt wrecks everything, including empires and civilizations ... including ours, soon enough.
I disagree with the any degree is fine, that I think was fairly true in the past, and if you come from a prestigious College--perhaps that still holds water to some degree, but what degree you get truly does matter currently.
A degree isn't just a work permit for many fields anymore, it prevents most people from other fields from doing the same job, i.e. Nursing. Take a typical student with the same degree, grade point average, connections etc and get a Nursing degree, and Liberal arts degree, and a Social work degree and see what happens. The Nursing major will be able to get a job and get paid pretty well out the gate, the Liberal arts student will be hoping to get a job at Starbucks and the social work major will get a highly stressful very low paid job, with massive turnover rates.
We tracked graduation placement for years afterwards at my former job, and the statistics were very telling (from 2002-2007). The degree you had overall made a major difference in income and job placement. Ideally things would be more like the old days, where you could learn a job, and prove your worth in it--but that is become less so in the ever more hyper-specialized Academic world. Most colleges have 50 or more new 'degrees' then they did in the 90's. All specialized aspects of certain majors.
I hope you don't give anyone you actually like advice to get a BA in religious studies, unless they have the social network to give them a job, maybe just maybe they can get a management job at Walmart perhaps?
-Meiyo
This discussion is insane. No undergrad degree is worth $100k. we are seeing salaries dropping now if you have a job and want to keep it!
In this next year you are going to see major staff reductions in local, state and Federal government staff. Don't believe me? Just look at the tax receipts and remember that once the midterm election is over there is no stimulus until the run up to the 2012 election.
Add in the oil/gas ramp down and the possible food shortages here in the US (yes I did say the US)! And this all looks completely insane to take on $100k of dept.
Any bets that we are at or over 25% unemployment by January or February 2011?
s4r
III
Federal govt. has been hiring (Thank God For Fear And Terrorism! :)). And Obama has 2.5 years to go. As long as the Chinese keep buying our bonds .. and they will ...
Sr4:
By that unemployment prediction I assume you mean U6?
25%? Not a shot. The corporations have no one left to cut, and the governments are not going to cut that much. Further, people do what they have to do... those that lost a corporate job opened a small business - maybe for less compensation, but they are, in fact, "employed".
This is what MUST happen. When forced to (in the absence of silly "stimulus" like extended "unemployment insurance" people will do what they have to to make a living.
This whole college loan thing is a terrible joke. I was just talking to my brother about this the other day. In a few yrs the feds will make it possible to declare bankruptcy on student loans after 10 yrs or some other arbitrary number.
The religious studies thing is usually a minor and people use it a lot in church teaching ministry's (Sunday school, church schools, etc...). A lot of people go to school and end up being stay at home moms and dads. Most of the ministers I know have a minimum of masters and the majority have a doctorate of theology or divinity. Missions is the only place that you can really get into with a B.A., but as you know the pay is not good in that field. :)
I think s4r & Greg are both correct. The black and grey markets will expand, due to the unemployed entering those markets. They'll have jobs labor departments won't know of. So they'll be officially unemployed.
Corps that aren’t TBTF, or perhaps more accurately Too Connected To Fail, have a LOT of room left to cut. Moreover, if you aren’t working for income by definition you aren’t employed. E.g. people like my brother, who was recently laid off yet is now growing a massive garden and fixing up what’s left of the family farm is unemployed. Unless he starts selling veggies or some other money generating activity he is unemployed.
U6 is the only BLS number worth looking at. U3 excludes some people from the workforce because they stubbed their big toe on a Friday, and others because the statistician at BLS had a lousy cup of coffee that morning, etc... A better look can be had by looking at YOY changes in payroll taxes remitted, but alas, it’s much worse than the BLS hooey. Most likely the Social Security Administration could just about nail the number at any given time, yet they don’t even bother to try. Wonder what they would report?
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