The Market Ticker
Commentary on The Capital Markets- Category [Education]

And not just when there's some buggery going on in the locker room either.

Tuition gouging for degrees that are useless in the real world and a failed business model have put U.S. colleges front and center as exacerbating income inequality.

Many college students are increasingly getting priced out of getting the very same skills elected officials in Washington, D.C. have strenuously argued are needed to stop rising pay gaps.

From the perspective of both the Federal Government and the colleges, however, there's nothing broken at all.

Over the decades, college officials have used their nonprofit status to build an unsustainable business model more akin to hoteliers, one that real estate mogul Donald Trump would envy. And all on the backs of taxpayers, students and their families.

On the contrary -- a hotelier does not attempt to force you to travel and thus be subject to his rent for the night.  Colleges, in conjunction with the rest of the Federal Government and other businesses, do.

Of course in a world where there was such a thing as actual prosecution for breaking of the law the mere discussion of "requiring" college degrees for work that has no bearing on the granted degree by any material portion of the employment universe would instantly lead to criminal prosecution under The Sherman Act.  A few $1 million fines leveled at individuals and some $10 million ones aimed at corporations and universities would prove quite the disincentive to that sort of cartel behavior!

A top college watchdog, the American Council of Trustees and Alumni (ACTA), adds: “It is a tragedy that our colleges and universities are increasingly characterized by their high costs, not their high standards,” adding, “it is time to demand improvement.”

Oh really?

Where is the demand to get rid of the "special" status that student loan debt has?  I'll tell you where it's not -- it's not coming from such so-called shining lights as Elizabeth Warren, who wishes to instead drive the cost of college higher by making the money even cheaper and more-available.  Basic economics tells us that this will do nothing more than shift the supply:demand curve even more toward unaffordable -- for anyone not (at that instant) using the "free" money.

That, of course, is literally everyone once they stop attending school!

Then there's what I've often talked about in that colleges put forward costs that I argue are intentional falsehoods in that they all quote "4 year" prices.  Yet the common "term" of school nowdays is six years, so your cost will be 50% higher.  THAT should be the quoted price -- the typical outcome, not the "best case" one.  Again there are myriad laws that allegedly require you not to mislead people in your advertising and promotional materials; how the so-called "4 year" costs don't objectively violate those laws is beyond me.

Next up is our President who has set "income based repayment" plans for federally-underwritten college debt.  That's a nice idea, except for one problem -- any amount ultimately written off is 1099'd to you and you owe federal tax on it unless you got the foregiveness by working for non-profits.  What's even worse is that such a 1099 is the same as income in the year it's written off, and if you have a large balance (say, $100,000) that is "forgiven" that will force your tax bracket for that year to be much higher and can easily result in a $30,000 tax bill -- due right now, thank you very little, and if you don't have it oh the IRS will attach yet more and continuing interest to the balance until you do!

And then there are the utterly worthless degrees -- especially those in the so-called "liberal arts."  It used to be that when you went to college the first two years or so was spent learning things that had little to do with a particular profession but plenty to do with what was thought of as classical education -- defined as literature, history, sciences and mathematics.  In short the first two years of your post-secondary education were designed to hone your ability to think, providing you with the historical and factual references necessary to do so.  Given that ability, the thought process went, you were more likely to be able to reasonably process information in your chosen profession.

Today this is no longer considered "necessary."  As a result we have a plethora of so-called "educated" people bearing college degrees who are incapable of thought, who believe that exponential growth can go on forever, who believe in 100mpg carburetors that were "suppressed" by oil companies, who fail to comprehend that we steal $700 billion from citizens in the form of taxes so others can sit on their ass and get drunk or high instead of working (yet we don't call that theft) and who fail to understand the basics of monetary balance, thereby permitting deficit spending of all sorts to take place on the premise that it's "good" -- or at least, isn't "bad."  This is why our local politicians can use the money that should be put aside for new roofs and cafeteria chillers in our local schools, a maintenance and replacement expense 20 years in the coming for things like Wii game consoles and then go back to the people crying poverty and demanding a tax increase without being at least politically hung by their necks until dead -- or being prosecuted for theft-at-gunpoint and possibly being literally sentenced to same.

The Federal Government loves this state of affairs, of course, since they're the biggest bamboozlers (and just plain boozers) among all.  It is their chicanery and lies that enable all the rest; without the deficit spending purchasing power would have dramatically increased among the common American.  Isn't that what we want to happen?  Well, it should be, but of course it's not among many, and the shibboleth commonly used is that weakening the currency (by expanding national debt) means that exports would be favored (and thus so would GDP.)  The problem with such a claim is that I have to buy my goods and services with said weaker currency; when I no longer can do that what happens next?  We know that: Earnings power is replaced by credit in a puerile (and futile) attempt to keep pace -- right up until that bubble bursts.

Are you going to see solutions to this problem?  Probably not, at least in the short run.  Like all bubbles the insanity inherent in them continues far longer than it should.  Eventually the universities playing this game, and their government enablers, will find either empty ivory towers or burnt out ones; revulsion either leads to abandonment or revolution, given enough time.

Let's hope it remains peaceful, although given the willingness of the various parties to do things that ought to be illegal I have my doubts.

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I find it utterly disgusting that people have to be personally cornholed before they will stand up and take a position to do the right thing.

Lisa Mason had taken out close to $100,000 in student loans in order to pay for nursing school, and was making payments on the debt when she died. Steve Mason said he and his wife, who had co-signed the loans, were contacted immediately after his daughter’s death and were told they must start making payments.

Yes, that's what a co-signer is.  But you forgot this, didn't you?

Mason said he believes private student loans should be regulated the same as federal student loans, and should be able to be forgiven if the borrower dies. He also said he believes student loans should be able to be discharged in bankruptcy, like other types of debt.

That used to be the case.

How old are you?  You were adults and were voting when this policy was changed, and student loans became unable to be discharged, effectively elevating them to the same status as child support.

You did nothing about it at the time, even though it is this super-status, along with all the government programs in the first place for "free money" that have led to the utterly unaffordable college situation students face today.

In other words, you're one of the reasons it happened, and now you're*****ed only because it bit you, personally, in the ass.

Screwing your kid wasn't enough to get you mad; you had to get personally screwed.

May Lisa rest in peace, but as for you -- well, you, Steve and Darnelle, you deserve it because you voted for it and silently sat for the imposition of the very policies that now have been turned against you.

You can't complain about what you tacitly or even explicitly approved!

PS: To everyone else -- don't co-sign loans.  Period.

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It just never ends.

School districts have kept "lunch money" accounts for quite some time, trying their level-best to avoid taking cash (which is what I always used to pay with and you probably did too.)

But this sort of crap is extremely offensive -- MySchoolBucks is a service of Heartland, which is a part of Wells Fargo.

It would be ok for them to outsource this thing, except for this little problem:

There is a 4.5% program fee for each transaction.

Yeah, that's more than double the discount rate on a credit card transaction -- that is, a 100% mark-up.

And it's even a worse mark-up for transactions on debit cards (which are cheaper than credit cards -- by a lot) and/or ACH transactions.

I might add that for transactions coming from Wells Fargo bank and debit accounts, which cost them exactly nothing, it is all profit.

You don't get screwed hard enough with property taxes, you see, -- now your School Board screws you in the ass when your kid eats their carb-loaded lunches as well all so a bank can pilfer even more from you.

Here's something to teach your kids this new school year: What's printed on your currency.  This note is legal tender for all debts, public and private.  

Once they've gone through the lunch line and have a plate of food, they have a debt.  Have them whip out the Washingtons and pay it; if the school refuses to take cash the food is free; once you've been offered legal tender in satisfaction of a debt if you refuse to accept it that debt is extinguished.

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