Obstacles and hardships are common to us all, some more so than others. This simple observation leads to another; far too many of us are making excuses for the lack of success in the present, based upon the pain of the past.
While it may be true that some have had a particularly difficult life, it isn’t true that that predetermines failure. On the contrary, difficulties, hardships and major obstacles can become contributors to our success.
Some years ago, a study by Victor and Mildred Goertzel entitled, Cradles of Eminence, explored the childhood experience and home environment of 300 highly successful people. Their names are easily recognizable: Franklin D. Roosevelt, Helen Keller, Winston Churchill, Albert Schweitzer, Gandhi, Einstein and Freud.
These findings are fascinating and deserve to be noted next time we’re tempted to focus on our weaknesses or past pain in an attempt to rationalize failure. Consider the following:
Three-fourths of the children studied had to contend with poverty, overbearing parents, broken homes, or rejection.
Seventy-four of the eighty-five writers of fiction and drama, as well as sixteen of twenty poets came out of home situations where tension and dysfunction between parents was the norm.
Over one-fourth had to deal with physical handicaps such as deafness, blindness or crippled limbs.
So you see, obstacles and hardships don’t have to lead to failure. William A. Ward was right when he said, “Adversity causes some men to break; others to break records.”
Biologists refer to this as “the adversity principle.” It seems that in their studies among plants and animals, well-being is not always an advantage to a species. Where there is no challenge, no obstacles or hardships, there is but limited growth and development. One recent survey discovered that 87% of the people questioned said “a painful event (death, illness, breakup, divorce, etc.) caused them to find a more positive meaning in life.”
To become all that you can be, you must live in the present and stop making excuses. We will always have problems, but problems exist to be solved. Churchill once remarked, “Kites rise highest against the wind – not with it.” Don’t be afraid to fly!
Lou Stoops is a pastor, teacher, keynote speaker, corporate trainer, life coach, workplace coach and business owner. He has served as a newspaper and web columnist, actor, television and radio personality. He holds undergraduate and graduate degrees in Theology and Christian Administration. He has achieved certification as a trainer in fatherhood programming with the National Center of Fathering; was accepted into and successfully completed a prestigious diversity program with the American Institute for Managing Diversity; is a certified trainer in “The Bridges Out Of Poverty” program with Aha Process; and is recognized as a Certified Training Consultant through the Center for Entrepreneurial Resources of Ball State University. He can be contacted at www.loustoops.com or [email protected]
The Fed Balance Sheet:
What is Uncle Sam’s Largest Asset?
By Doug Short
Note from dshort: I’ve updated the quiz based on yesterday’s Q1 Flow of Funds release. Hint: The correct answer is the same, just more incredible.
Pop Quiz! Without recourse to your text, your notes or a Google search, what line item is the largest asset on Uncle Sam’s balance sheet?
A) U.S. Official Reserve Assets
B) Total Mortgages
C) Taxes Receivable
D) Student Loans
The correct answer, as of the latest Flow of Funds report for Q1 2012, is … Student Loans.
The College Conspiracy
The rapid growth in student debt has been a frequent topic in the financial press. One stunning chart that caught my attention illustrated the rapid growth in federal loans to students since the onset of the great recession. Here is a chart based on data from the Flow of Funds Table L.105, which shows the Federal Government’s assets and liabilities.
As I point out on the chart, the two callouts are for Q4 2007, the quarter in which the Great Recession began (December 2007) the most recent quarter on record, Q1 2012. The loan balance has risen and astonishing 332% over that timeframe, most of which dates from after the recession.
This chart only includes federal loans to students. Private loans make up an even larger amount. Earlier this year the Consumer Financial Protection Bureau (CFPB) posted an article with the attention-grabbing title: Too Big to Fail: Student debt hits a trillion. The details of the private student loan market are not readily available, but CFPB plans to publish its study results on the topic this summer.
Again. What line item is the largest asset on Uncle Sam’s balance sheet?
A) U.S. Official Reserve Assets
B) Total Mortgages
C) Taxes Receivable
D) Student Loans
But back to our quiz. Student loans may be a liability on the consumer balance sheet, but they constitute an asset for Uncle Sam. Just how big? Nearly 35% of the total federal assets, over four times the 8.6% percent for the total mortgages outstanding.
Of course, assets are, sadly, the trivial side of Uncle Sam’s Flow of Funds balance sheet — about 1.36 Trillion. The liability side totaled 12.65 Trillion at the end of Q1 (details here).
Student loan debt is something we’ll want to continue watching, especially when more details of the private loan market becomes available.
Footnote: For those who wonder how much the pie chart above differs from the Q4 2011 version, here’s the previous version, based on the data reported in the March 8, 2012 release.
Financial Sex Aid: Florida Co-Eds Seek “Sugar Daddy” for College Degree
– People who are looking for the perfect match, both men and women, go online seeking a certain kind of arrangement.
A “sugar baby” is typically younger and eager for adventure. A “sugar daddy” is usually an older, financially established provider. A website called www.seekingarrangement.com helps the two meet.
CBS4?s Jorge Estevez found a 22-year old who is looking for her first sugar daddy. She is a Miami student looking for someone to help her pay for her higher education and all the related expenses.
A self-proclaimed, cute blonde who is looking for fun in Fort Lauderdale admits to being a college student looking for some help.
And another pretty, young Miami college girl, who does not want to be identified, is more direct, asking specifically for 10 to 20-thousand dollars monthly. The 22-year old claims to be looking for someone who will never say ”NO” to her needs.
“The lesson here… ask and you shall receive,” she told Estevez.
“What have they given you?” asked Estevez.
“They have given me cars, trips, jewelry. These guys will take you out and they will court you,” she responded.
Jorge asked “What do these guys do for you?”
“They support you financially… financially,” she replied.
Support is proving to be crucial for a 20-year old sugar baby, who is in college at Florida International University.
“Have they paid your tuition?” asked Estevez.
“Books?” he asked.
“Books. Everything,” she responded. “When I say everything… I mean everything.”
In fact, her profile asks for someone to “help a young’in out”. And she is not alone. Numbers compiled by the “seeking arrangement” website showed that in the past six months, FIU ranked 20th in a list of the top universities with “sugar baby” sign ups.
Florida ranked third in the U.S. behind New York and California with 67,815 total users, of all ages. There are just over 1,000,000 and growing .
Our FIU student argued that it’s a way to survive the times.
“I don’t get support from my parents. As soon as I turned 18, they told me I am on my own. I have to figure everything out on my own Jorge.”
“And you discovered this? And you thought…?” asked Estevez.
“My dreams came true Jorge.”
“Your dreams came true,” he repeated.
Then his interview added, “But with every give… there is a take.”
“They give you trips. They pay for school. They give you presents. What do you give them?” asked Estevez.
“Sex,” said the FIU “sugar baby.”
“Just like that,” asked Jorge.
“Just like that,” she said.
“And you are OK with that?” Jorge probed.
“I am OK with that,” she replied.
But seeking arrangement, which began in 2006, insists they are not an escort service and specifies the terms of the relationship are left up to the two consenting users. Estevez spoke with the website’s founder, Brandon Lee.
“Why is this not like prostitution, since you mentioned it?” asked Estevez.
“We do not allow escorts or prostitutes to use the website. That is what I call a one or two-hour arrangement. It is not what this is about,” Lee said.
In fact, the website monitors profiles. They claim they shut down as many as 20-a day for alluding to inappropriate behavior.
“To make sure that terms such as hourly rate, in call, out call and terms like that aren’t used, we highlight them and catch them.
We put that question on the table for our “sugar baby.”
“What do you say to people who say this is a form of prostitution?” asked Estevez of our FIU student.
“That is not true,” she explained. “Prostitution is when you get paid for sex and that is just it. Sex. For this, you build a relationship with someone.”
It’s a relationship that begins online, a common practice nowadays, where one person logs on hoping to find another who is also in search of that perfect match.
“Years from now you are successful. What do you say to you about doing this?” Jorge inquired.
“They have money they want to help you. They see you struggling, They want to help you. Whether or not it is an arrangement… it is still a relationship,” the woman explained.
A match, found online, between two consenting adults looking for their own special arrangement.
So what is the ratio for these consenting adults? Well, most dating websites have more men than women. But at seekingarrangement.com, it’s the opposite. The ratio is 20 sugar babies to every one sugar daddy.
Seeking Arrangement is developing a mobile app for your smart phone and the website is going global with a Spanish language version and other languages.
Every year, parents pay through the nose for college-admission counselors who will supposedly let them in on the secret to getting into a first-choice school. So let me save you from emptying your bank account and tell you, right now, the single biggest advantage students can easily give themselves for getting into a top university: Apply early decision.
By applying early decision—for which the application deadline is usually Nov. 1, two months before most regular-admission deadlines—the applicant agrees to attend that school should they be accepted. Which means kids can only apply early decision to one school. If the school says yes, so must the student.
Many people don’t know that early-decision applicants get an edge when applying to college. What even fewer know is just how big that edge is. It’s enormous. Applying early admission can often double or even triple your child’s chances of getting into a top school. It is the single most effective admissions strategy there is for most students—and the most underutilized.
Every sign suggests that this year’s college-admission sweepstakes is going to be crazier than ever, and last year’s numbers were positively insane. Six of the eight Ivy League schools had admission rates under 10 percent, as did Stanford, MIT, and a handful of other very specialized schools. But even several dozen colleges that aren’t in the very top tier had regular admission rates under 20 percent. For example, Bowdoin, Emory, and Hamilton all had regular admission rates under 20%. Just five years ago, there were all over 30 percent.
But here’s the big caveat: Those are admission rates for regular applicants. For early-decision applicants, the data look a lot rosier. A couple of examples: Brown reported an overall acceptance rate of 8.7 percent last year, but for kids applying under the regular deadline, their odds were actually worse than that: only about 7.5 percent of them got in. By contrast, a whopping 20 percent of kids who applied early decision received a fat envelope from Brown—one of the most selective schools in the country.
The story repeated itself at other Ivies. Penn accepted just 11 percent of kids who applied under the regular deadline, but more than 34 percent of kids who applied early decision. Cornell was even more dramatic: 16 percent of kids who applied under the regular deadline were admitted, but fully 36 percent of early-decision kids found good news in their mailbox.
This difference was just as pronounced at highly selective non-Ivies. Amherst took just 12 percent of regular applicants but 34 percent of kids applying ED. Midwest powerhouse Northwestern took just 26 percent of the regular pool but 39 percent of the early group. And Bucknell accepted 27 percent of kids in the regular pool, and a staggering 62 percent of early-decision applicants.
Its tempting to chalk up the success gap separating regular and ED applicants to something other than the actual act of applying early decision. Do kids who apply early have significantly better qualifications?
Hardly. In fact, it is often just the opposite. Certain segments of the early-decision applicant pool often have lower grade-point averages and SAT scores than the regular applicants. This is particularly true among college athletes. Because the Ivy League and Division III schools are prohibited from offering athletic scholarships, the tactic favored by coaches at these schools is to build their teams by “encouraging” student-athletes to apply early decision. (Only five of the Ivies—Brown, Columbia, Cornell, Dartmouth, and Penn—use ED.) Coaches can’t guarantee admission—that is the exclusive province of admission officers—but they typically have significant clout.
For the rest of the kids who apply early, the odds are noticeably better as well. Colleges rarely break out the mean SAT scores of kids admitted early compared to kids accepted during the regular round. But the observations of people like Mike Muska, my co-author of Getting In!, and the longtime Dean of College Relations at Brooklyn’s Poly Prep are instructive. “The early decision round is more forgiving than the regular round. They won’t admit a candidate who is not in the ballpark. But they will enlarge the sweet spot. Is it a 20 percent variability? Absolutely. 30 percent? Maybe.”
Why do colleges offer early-decision programs? Simple: competition. Every college is competing with schools both above and below them in the rankings pecking order. And every year they have to get “attractive” kids to apply, and then—the harder part—get those kids they accept to actually show up in September. Early decision is the only way a college can guarantee that an admitted kid will become part of its incoming freshman class.
The following chart shows the percentage of each class that was filled in 2010 by early-decision kids:
The percentage of students who choose to matriculate at a particular school compared to the number who were accepted by that school is known as yield. Every college uses a mix of historical data and newer factors to calculate its expected yield. Did the school play in the Final Four the previous year? Has a particular celebrity enrolled? Was the lavish new $50 million student center finally completed? But in the end, predicting yield is still basically guesswork. Early-decision acceptances help colleges reduce that uncertainty, providing schools a better chance of hitting their target enrollment numbers.
Surprisingly, most kids don’t take advantage of the early-decision option. Last year, more than 245,000 applications were received by the eight Ivy League colleges, but only 21,000 of them were under the early-decision or early-action umbrella. (A very small number of highly selective colleges—like Harvard, Yale, Princeton, and Stanford—offer an “early action” option: apply early in the senior year, and we’ll notify you early. But it is not binding and it doesn’t offer an edge.) Even smaller percentages of kids took advantage of early-decision programs at Amherst, Duke, and Middlebury, all schools that shower love on their early-decision applicants.
So why don’t more kids take advantage of an option that both improves their odds of acceptance and makes the application process a lot less stressful? Three reasons are commonly heard.
First, kids don’t get their act together soon enough. Way too many families begin the college-admission process in earnest at the start of senior year. For most families, that’s too late to do any real investigation of individual colleges.
Second, because of this late start, kids are hesitant to commit to a single school, afraid they’ll choose “the wrong one.”
And third, parents are concerned that they will receive a smaller financial aid package because the school knows that the student has already committed to attending.
The most important piece of advice good college counselors give families is to start the admissions process early. At most top private schools, the college selection process gears up in earnest early in the junior year. That gives families enough time to visit colleges, do substantive research about various places, and engage in a thoughtful sorting process.
By contrast, most public schools don’t start the process with their kids until the beginning of senior year. Moreover, many public school districts have cut back on the number of college counselors. With 300 or more kids per counselor, adequate individual attention is rare.
Kids—preferably with a parent—should visit the three or four colleges they are most interested in as soon as possible. Setting foot on a campus is the single best way to know if a school is a good fit.
Second, making a wrong college choice is not the end of the world. Very often, kids visit colleges, do their research, and take the time to make an informed choice—and then, after a semester or less, figure out the place is wrong for them.
Third, schools are not inclined to squeeze families who have shown them loyalty by applying early. Financial aid decisions are based on need, and the award package from one school shouldn’t be too much different from another—at least not for early-decision kids. In the regular admissions pool however, financial aid offers can be affected as the total bank of available money gets depleted.
Finally, one of the little known secrets about financial aid is that the package offered to families is not engraved in stone. Financial aid officers can exercise what is known as professional judgment. They have some discretion in how much they award and how they craft financial-aid packages. So, fear of a reduced financial-aid package shouldn’t be a deterrent to applying early decision.
One note of caution: use that early-decision application wisely. You only get to pull the trigger once, so the competitive bump shouldn’t be wasted on a school where you have little chance of getting in. If you’re in the ballpark—based on your grades, SATs, and some desired “hook” you’re bringing to that campus—it is worth pursuing early decision. But if you’re a solid B student who can’t sink a basket, consider using that ED bullet somewhere more realistic than a hyper-competitive Ivy.
It is always wise to discuss your ED strategy with the high school college counselor. Many of them will know particular college preferences. For example, the University of Pennsylvania is not hesitant to admit that if you’re a legacy hoping to leverage that edge, you’d better apply ED. Similarly, coaches will tell you that if you don’t go ED, you’ll lose their admission support.
The bottom line? Kids who want to get into a selective or highly selective college should do everything possible to take advantage of the early-decision option. It’s the best arrow in your quiver, so leaving it there unused just seems foolish.
– What do you think about College in the 21st Century? Many have alluded to a natiowide College Conspiracy pushed on the public to encourage the notion that ONLY through College can you become a success. This fallacy is one of many propagated by our Government, Loan Originators and the Public Education System.. The simple fact is College is not for everyone. We seek formal education primarily for monetary gains. Be sure to know your path before you begin the journey of higher education. – PECAN
While the job market remains sluggish, student loan debt continues to rise, fueling fears that a higher-education spending bubble may be underway.
Outstanding student debt has climbed 25 percent since the start of the financial crisis in 2008, according to the Federal Reserve Bank of New York — an increase from $440 billion then to $550 billion now. By contrast, every other major category of consumer debt, including mortgage debt, credit card debt, auto loans and home equity loans, is lower today than it was in the fall of 2008.
Not only has student debt risen precipitously, but more and more of those loans aren’t getting paid off on time. In the second quarter of 2011, the rate of student loans that were more than 90 days past due rose from 10.6 percent to 11.2 percent, according to the New York Fed.
Looking at other major types of debt — again, including home loans, auto loans and mortgage and credit card debt — those delinquency rates either declined or stayed flat for the quarter. But delinquency rates for student loans rose and continue to rise.
Experts have warned for years that a bubble may be developing in higher education, as students take out loans to pay for tuition and then find themselves hamstrung by debt and unable to find a job once out of school.
The problems of student-loan delinquency and default are only expected to get worse. Salaries and employment rates for recent college graduates have dropped: The median starting salary for a member of the class of 2009 or 2010 is only $27,000, down from $30,000 a couple of years ago. A recent report from Moody’s Analytics predicted that over the next few years, “many students will be unable to service their loans as income growth falls short of borrowers’ expectations.”
And the debt-ceiling deal that lawmakers reached in Washington earlier this month contains additional provisions that will make life harder for students taking out loans. One section of the deal changes the way interest is collected on a certain kind of federal loan for graduate students, meaning that those borrowers will start accruing interest on their loans before they’ve finished school.
The Moody’s report found that student lending grew by at least 10 percent each year between 2000 and 2010, including during the financial crisis and the Great Recession.
Over the past several decades the expense in the cost of education has grown dramatically along with an upsurge in attendance. Some have referred to this as the College Conspiracy
“Fears of a bubble in educational spending are not without merit,” the report warned.
Last month, the Chronicle of Higher Education reported that one out of every five government student loans that entered repayment in 1995 has since gone into default.
Yet a college degree still appears to be a significant advantage when it comes to the job market. A recent report from the Labor Department shows that for workers 25 and over with at least a bachelor’s degree, the unemployment rate in July was 4.3 percent — compared with 8.3 percent for workers with “some college,” and 9.3 percent for workers with just a high school diploma.
In other words, while unemployment for high school graduates slightly exceeds the national rate of 9.1 percent, the jobless rate for college graduates is less than half that.
36 Statistics Which Prove That The American Dream Is Turning Into A Nightmare For The Middle Class
The U.S. middle class is being shredded, ripped apart and systematically wiped out. If you doubt this, just check out the statistics below. The American Dream is being transformed into an absolute nightmare. Once upon a time, the rest of the world knew that most Americans were able to live a middle class lifestyle. Most American families had nice homes, most American families had a car or two, most American families had nice clothes, most American families had an overabundance of food and most American families could even look forward to sending their children to college if that is what the kids wanted to do. There was an implicit promise that this was the way that it was always going to be. Most of us grew up believing that if we worked really hard in school and that if we stayed out of trouble and that if we did everything that “the system” told us to do that there would be a place for us in the middle class too. Well, it turns out that “the system” is breaking down. There aren’t enough good jobs for all of us anymore. In fact, there aren’t very many crappy jobs either. Millions are out of work, millions have lost their homes and nearly all of the long-term economic trends just keep getting worse and worse. So is there any hope for the U.S. middle class?
No, there is not.
Unless fundamental changes are made economically, financially and politically, the long-term trends that are destroying the U.S. middle class will continue to do so.
The number of good jobs has been declining for a long time. The good jobs that have been lost are being replaced by a smaller number of low paying “service jobs”.
Meanwhile, the cost of everything is going up. It is getting really hard for American families to be able to afford to put food on the table and to put gas in the tank. Health care costs are absolutely outrageous and college tuition is now out of reach for millions of American families.
Every single month more American families fall out of the middle class. Today there are 18 million more Americans on food stamps than there were just four years ago. More than one out of every five U.S. children is living in poverty. Things are getting really, really bad out there.
The following are 36 statistics which prove that the American Dream is turning into an absolute nightmare for the middle class….
#1 The competition for decent jobs in America has gotten absolutely insane. There have been reports of people actually getting down on their knees and begging for jobs. Many Americans are starting to wonder if they will ever get a decent job again. According to the U.S. Bureau of Labor Statistics, the average duration of unemployment in the United States is now an all-time record 39 weeks….
#2 According to the Wall Street Journal, there are 5.5 million Americans that are unemployed and yet are not receiving unemployment benefits.
#3 The number of “low income jobs” in the U.S. has risen steadily over the past 30 years and they now account for 41 percent of all jobs in the United States.
#4 Only 66.8% of American men had a job last year. That was the lowest level that has ever been recorded in all of U.S. history.
#5 Once upon a time, anyone could get hired at McDonald’s. But today McDonald’s turns away a higher percentage of applicants than Harvard does. Approximately 7 percent of all those that apply to get into Harvard are accepted. At a recent “National Hiring Day” held by McDonald’s only about 6.2 percent of the one million Americans that applied for a job were hired.
#6 There are now about 7.25 million fewer jobs in America than when the recession began back in 2007.
#7 The United States has lost an average of about 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.
#8 A New York post analysis has found that the rate of inflation in New York City has been about 14 percent over the past year.
#9 The average price of a gallon of gasoline in the United States is now up to $3.91 a gallon.
#10 Over the past 12 months the average price of gasoline in the United States has gone up by about 30%.
#11 Spending on energy now accounts for more than 6 percent of all consumer spending. Every time this has happened since 1970 we have also had a recession that followed.
#12 The average American driver will spend somewhere around $750 more for gasoline in 2011. Unfortunately, it seems likely that the price of oil is going to go up even higher. Already the price of oil is closing in on the all-time record….
#13 In the United States, over 20 percent of all children are living in poverty. In the UK and in France that figure is well under 10 percent.
#14 According to the U.S. Census, the number of children living in poverty has gone up by about 2 million in just the past 2 years.
#15 The wealthiest 1% of all Americans now own more than a third of all the wealth in the United States.
#16 The poorest 50% collectively own just 2.5% of all the wealth in the United States.
#17 The wealthiest 1% of all Americans own over 50% of all the stocks and bonds.
#18 According to a new report from the AFL-CIO, the average CEO made 343 times more money than the average American did last year.
#19 In 1980, government transfer payments accounted for just 11.7% of all income. Today, government transfer payments account for 18.4% of all income.
#20 U.S. households are now receiving more income from the U.S. government than they are paying to the government in taxes.
#21 59 percent of all Americans now receive money from the federal government in one form or another.
#22 The average cost of tuition, room and board at America’s public universities is now $16,000 a year. For America’s private universities, that figure is $37,000 a year.
#23 The cost of college tuition in the United States has gone up by over 900 percent since 1978.
#24 Approximately two-thirds of all college students graduate with student loan debt.
#25 17 million college graduates are doing jobs that do not even require a college degree.
#26 According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980. Today they account for approximately 16.3%.
#27 One study found that approximately 41 percent of working age Americans either have medical bill problems or are currently paying off medical debt.
#28 Back in 1965, only one out of every 50 Americans was on Medicaid. Today, one out of every 6 Americans is on Medicaid.
#29 Total credit card debt in the United States is now more than 8 times larger than it was just 30 years ago.
#30 During the first three months of this year, less new homes were sold in the U.S. than in any three month period ever recorded.
#31 Now home sales in the United States are now down 80% from the peak in July 2005.
#32 U.S. home prices have now declined 32% from the peak of the housing bubble.
#33 For most middle class families, the family home is the number one financial asset. Unfortunately, U.S. home values have declined an astounding 6.3 trillion dollars since the housing crisis first began.
#34 According to a recent census report, 13% of all homes in the United States are currently sitting empty.
#35 The housing crisis just seems to keep on getting worse. 31 percent of the homeowners that responded to a recent Rasmussen Reports survey indicated that they are “underwater” on their mortgages.
#36 Unfortunately, it looks like millions more middle class Americans could soon be in danger of losing their homes. According to the Mortgage Bankers Association, at least 8 million Americans are at least one month behind on their mortgage payments at this point.
Student Loan Debt Hell: 21 Statistics That Will Make You Think Twice About Going To College
Is going to college a worthwhile investment? Is the education that our young people are receiving at our colleges and universities really worth all of the time, money and effort that is required? Decades ago, a college education was quite inexpensive and it was almost an automatic ticket to the middle class. But today all of that has changed. At this point, college education is a big business. There are currently more than 18 million students enrolled at the nearly 5,000 colleges and universities currently in operation throughout the United States. There are quite a few “institutions of higher learning” that now charge $40,000 or even $50,000 a year for tuition. That does not count room and board or living expenses. Meanwhile, as you will see from the statistics below, the quality of education at our colleges and universities has deteriorated. When graduation finally arrives many of our college students have actually learned very little. Tthey find themselves unable to get good jobs and end up trapped in student loan debt hell for essentially the rest of their lives.
Across America today, “guidance counselors” are pushing millions of high school students to go to the very best colleges that they can get into, but rarely do they caution them about how much it is going to cost or about the sad reality that they could end up being burdened by massive debt for decades.
Yes, college is a fun and it is a really unique experience. If you can get someone else to pay for it then you should definitely consider going!
There are also careers which absolutely require a college degree. Depending on your career goals, you may not have much of a choice of whether to go to college or not.
But that doesn’t mean that you have to go to student loan debt hell!
You don’t have to go to the most expensive school that you can get into.
You don’t have to take out huge student loans.
There is no shame in picking a school based on affordability.
The sad truth is that pretty much wherever you go to school the quality of the education is going to be rather pathetic. A highly trained cat could pass most college courses in the United States today.
Personally, I have had the chance to spend quite a number of years on college campuses. I enjoyed my time and I have some pretty pieces of parchment to put up on the wall. I have seen with my own eyes what goes on at our institutions of higher learning.
The vast majority of college students in America spend two to four hours a day in the classroom and maybe an hour or two outside the classroom studying. The remainder of the time these “students” are out drinking beer, partying, chasing after sex partners, going to sporting events, playing video games, hanging out with friends, chatting on Facebook or getting into trouble. When they say that college is the most fun that most people will ever have in their lives they mean it. It is basically one huge party.
If you are a parent and you are shelling out tens of thousands of dollars every year to pay for college you need to know the truth.
You are being ripped off.
Sadly, a college education just is not that good of an investment anymore. Tuition costs have absolutely skyrocketed even as the quality of education has plummeted.
A college education is not worth getting locked into crippling student loan payments for the next 30 years.
Even many university professors are now acknowledging that student loan debt has become a horrific societal problem. Just check out what one professor was quoted as saying in a recent article in The Huffington Post….
“Thirty years ago, college was a wise, modest investment,” says Fabio Rojas, a professor of sociology at Indiana University. He studies the politics of higher education. “Now, it’s a lifetime lock-in, an albatross you can’t escape.”
Anyone that is thinking of going to college needs to do a cost/benefit analysis.
Is it really going to be worth it?
For some people the answer will be “yes” and for some people the answer will be “no”.
But sadly, hardly anyone that goes to college these days gets a “good” education.
There’s Nothing Average About An Average Student Loan Debt
No human being is average. An average is a mathematical abstraction. You are no abstraction. You are a real soul with a desire to live and fulfill some purpose in life, for which you need to be free, so that you can meet this purposeful destiny.
To the great apostles of political freedom the word ‘freedom’ meant freedom from coercion, freedom from the arbitrary power of other men, release from the ties which left the individual no choice but obedience to the order of a superior to whom he was attached.
These are the words of Nobel laureate F.A. Hayek in his superb book The Road To Serfdom.
If you review your life, my friend, I doubt that you could argue that you’ve lived it under repression, where you’ve been coerced by an arbitrary power to break your ties with your beloved family and friends to be forced to obey without any other choice a superior to whom you were now dependent.
If you are or have been, on the contrary, like any typical student who has wished to join the ranks of the collegiate, by attending some university campus somewhere, then you voluntarily took on debt. With it you bought into the propaganda that a college degree was the best investment that you could make in your young life.
We really do need to rethink our approach to higher education in this country.
Posted below are 21 statistics about college tuition, student loan debt and the quality of college education in the United States…. #1 Since 1978, the cost of college tuition in the United States has gone up by over 900 percent.
#2 In 2010, the average college graduate had accumulated approximately $25,000 in student loan debt by graduation day.
#3 Approximately two-thirds of all college students graduate with student loans.
#4 Americans have accumulated well over $900 billion in student loan debt. That figure is higher than the total amount of credit card debt in the United States.
#5 The typical U.S. college student spends less than 30 hours a week on academics.
#6 According to very extensive research detailed in a new book entitled “Academically Adrift: Limited Learning on College Campuses”, 45 percent of U.S. college students exhibit “no significant gains in learning” after two years in college.
#7 Today, college students spend approximately 50% less time studying than U.S. college students did just a few decades ago.
#8 35% of U.S. college students spend 5 hours or less studying per week.
#9 50% of U.S. college students have never taken a class where they had to write more than 20 pages.
#10 32% of U.S. college students have never taken a class where they had to read more than 40 pages in a week.
#11 U.S. college students spend 24% of their time sleeping, 51% of their time socializing and 7% of their time studying.
#12 Federal statistics reveal that only 36 percent of the full-time students who began college in 2001 received a bachelor’s degree within four years.
#13 Nearly half of all the graduate science students enrolled at colleges and universities in the United States are foreigners.
#14 According to the Economic Policy Institute, the unemployment rate for college graduates younger than 25 years old was 9.3 percent in 2010.
#15 One-third of all college graduates end up taking jobs that don’t even require college degrees.
#16 In the United States today, over 18,000 parking lot attendants have college degrees.
#17 In the United States today, 317,000 waiters and waitresses have college degrees.
#18 In the United States today, approximately 365,000 cashiers have college degrees.
#19 In the United States today, 24.5 percent of all retail salespersons have a college degree.
#20 Once they get out into the “real world”, 70% of college graduates wish that they had spent more time preparing for the “real world” while they were still in school.
#21 Approximately 14 percent of all students that graduate with student loan debt end up defaulting within 3 years of making their first student loan payment.
There are millions of young college graduates running around out there that are wondering where all of the “good jobs” are. All of their lives they were promised that if they worked really hard and got good grades that the system would reward them.
Sometimes when you do everything right you still can’t get a job. A while back The Huffington Post featured the story of Kyle Daley – a highly qualified UCLA graduate who had been unemployed for 19 months at the time….
I spent my time at UCLA preparing for the outside world. I had internships in congressional offices, political action committees, non-profits and even as a personal intern to a successful venture capitalist. These weren’t the run-of-the-mill office internships; I worked in marketing, press relations, research and analysis. Additionally, the mayor and city council of my hometown appointed me to serve on two citywide governing bodies, the planning commission and the open government commission. I used to think that given my experience, finding work after graduation would be easy.
At this point, however, looking for a job is my job. I recently counted the number of job applications I have sent out over the past year — it amounts to several hundred. I have tried to find part-time work at local stores or restaurants, only to be turned away. Apparently, having a college degree implies that I might bail out quickly when a better opportunity comes along.
The sad truth is that a college degree is not an automatic ticket to the middle class any longer.
But for millions of young Americans a college degree is an automatic ticket to student loan debt hell.
Student loan debt is one of the most insidious forms of debt. You can’t get away from student loan debt no matter what you do! Federal bankruptcy law makes it nearly impossible to discharge student loan debts, and many recent grads end up with loan payments that absolutely devastate them financially at a time when they are struggling to get on their feet and make something of themselves.
So are you still sure that you want to go to college?
Another open secret is that most of our colleges and universities are little more than indoctrination centers. Most people would be absolutely shocked at how much unfiltered propaganda is being pounded into the heads of our young people.
At most colleges and universities, when it comes to the “big questions” there is a “right answer” and there is virtually no discussion of any other alternatives.
In most fields there is an “orthodoxy” that you had better adhere to if you want to get good grades.
Let’s just say that “independent thought” and “critical thinking” are not encouraged at most of our institutions of higher learning.
Am I bitter because I didn’t do well? No, I actually did extremely well in school. I have seen the system from the inside. I know how it works.
It is a giant fraud.
If you want to go to college because you want to have a good time or because it will help you get your career started then by all means go for it.
Just realize what you are signing up for…..
If you have a degree, you may have bought into the belief that an average student loan debt was no big deal since, being average, most students were assuming it to be “the thing to do for anyone going to college.”
The new freedom promised, however, was to freedom from necessity, release from the compulsion of the circumstances which inevitably limit the range of choice of all of us. Freedom in this sense is, of course merely another name for power or wealth.
Doesn’t this sound more like you, nevertheless? Isn’t this what you really wanted? Wasn’t it a desire for freedom from necessity and from having to confront the simple fact that you live in a world where you cannot do everything that your heart desires, that encouraged that voice to whisper in your ear: “With a college degree in my hands I will have the power to become wealthy”?
So, you went ahead and fell for an ancient trick. You had the expectation that you would succeed in showing off to others how free you truly could become, merely by postponing the inevitable – having to pay that average student loan debt.
Yet this trick chained you to a rail along the long road to serfdom. For you will have to pay off those loans. And you will give up far more than they’re worth for it. And who cares if others are now slaves along with you?
Is it not always better to be an insignificant freeman than an average slave?
The Average Student Loan Debt Is More Than What You Owe A Bank!
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 makes it virtually impossible for you to discharge student loan debt through bankruptcy. For as long as you can make money in any way, you will be required by those in real power – your masters, the lenders – to pay what you owe them.
If this “investment” that you made doesn’t pay off, if this average student loan debt proves unweilding, then you literally won’t be able to pay off your loan as you’ve anticipated; that is, you won’t be able to pay it off according to your time line or even your liking. But pay it you shall for as long as you’re alive making traceable money somewhere, somehow.
You will be a slave fettered with electronic chains to your lender’s collections agency. An agency can garnish your wages if your disposable earnings per week exceed thirty times the federal minimum hourly wage.
average student loan debt shakedown.
Put another way, this means that if you make $154.50 or more per week your wages will be garnished.
Your disposable income, which is whatever money you have left after paying all required taxes and national insurances, will not be yours but will belong to the lender by federal law.
What’s the likelihood of this happening to you? Well, you do the math.
Let’s see what should have been the most that you should have paid for your college education. If you’ve paid more than you should have, then you’re screwed.
To estimate this valuation we must calculate what’s known as your capitalization rate or the cap rate of this college “investment” that you’re the proud owner of. Of course, this is a calculation that you should have made way before taking on any student loans. But this exercise should prove valuable to you in many other ways.
The cap rate is a very useful tool because it helps you figure out whether you should buy an income-producing asset by borrowing for it. Do you think your college education is an asset that can generate income for you? Then let’s determine its cap rate.
To begin this calculation we’re going to use an example to make things easy to understand. We’re going to estimate first the cap rate for an actual business. Then we will use your average student loan debt to estimate your own cap rate for college.
Let’s say that there is an in-home seniors care provider business that you want to buy. It’s going for $25,000. This business produces $2,500 per month after taxes and insurance. Annual net income therefore is $30,000. Let’s say the bank charges 5.25% fixed interest for your loan, and you want to pay the loan in 15 years.
How much of the loan are you paying per year? Dividing 100% by 15 tells you that you’re paying 6.67% of the loan every year. This is your repayment rate. You also already know that you have to pay interest of 5.25% per year for 15 years. So now add the 6.67% repayment rate to your 5.25% interest rate. You end up with 11.92%. This is your cap rate or 0.1192 in decimal form.
Here’s how to use your cap rate to determine whether buying this senior care business makes sense.
Take the $30,000 worth of annual income and divide it by your cap rate of 0.1192, which will give you $201,342. This is the maximum amount of money that you should pay for this business. If you buy it by borrowing $25,000 at 6.67% for 15 years to make $30,000 per year, then you are buying it at a bargain price.
Now let’s estimate a cap rate for an undergraduate in the social sciences going into an entry level job and see how he fairs having embraced an average student loan debt of $24,000.
Should You Have Sought Even For An Average Student Loan Debt?
Junior has consolidated his loans at a rate of 6.75%. His average student loan debt repayment plan calls for paying $24,000 over 20 years. He believes that he will average a gross salary of $50,000 per year. His cap rate is 11.75% which, when divided into $50,000 yields $425,532 as the maximum that he should have paid for his college education. Pretty nifty, huh? Seems like junior made a great decision, except for a few intrusive points.
What if junior can’t get work, can’t break into his career field and ends up working at a job that doesn’t require a degree, making half of what he expected?
What if junior doesn’t have the average student loan debt but more like $35,000, $50,000, $80,000 even $125,000 or more in loans? What then should his education have cost him?
What if junior, being a wage earner rather than a business owner, gets stuck in a tax bracket that doesn’t allow him to net out more than $40,000? After all the median household income in the United States is $46,326.
So half of American households live on less than this income amount gross every year. Only 34% of all U.S. households make more than $65,000. Only 17.8% make more than $118,200 a year and just 2.67% make more than $200,000. College doesn’t guarantee you an individual income in any particular income bracket.
More importantly, we must apply the cap rate to junior’s net income, which is the money from his wages that he has left after paying all his interests, taxes and insurance expenses. That’s called junior’s disposable income.
How much of a personal disposable income would junior have if he had to pay a big student loan, a ton of credit card debt, FICA, unemployment and all kinds of other taxes, plus his insurance premiums for his car, property and health?
The U.S. Census indicates that per capita disposable income in this country is around $35,000. But that’s just the nation’s total disposable income divided by the total population. What if your personal disposable income is only one-third of this?
Do you think it farfetched?
What if I told you that 1 in 5 people filing for bankruptcy right now are college students and that this is just a point along a trend going back for 2 decades?
Here’s what the Networks Financial Institute at Indiana State University had to say about young adults of college age and beyond. Does it sound like people who have lots of personal disposable income?
Americans aged 25-34 have the second highest rate of bankruptcy (just after those aged 35 to 44). The bankruptcy rate among 25-34 year olds increased between 1991 and 2001, indicating the GenXers were more likely to file bankruptcy than were young baby Boomers at the same age.
average student loan debt forgiveness And what if you owed $80,000 more than the average student loan debt and you had to pay it at 6.75% for 15 years because of minimum monthly payment requirements by your lender?
Now we’re talking!
Do the math. Your cap rate would be 13.42% and your disposable income $11,655, which means that the most that you should have paid for college should have been $86,848.
Yet you paid $104,000 for it. That’s a 20% premium beyond what you should have paid for your education. Now, how smart of an investment was that for an educated person?
Can you say “I’m broke but can’t go bankrupted.” Say then, “I’m a serf of my lender.”
You might think that you’re safe so long as your average student loan debt stays, well, average. But even if you had loaded yourself with just an average student loan debt, in conclusion this burden leaves you at a disadvantage because, had you spent the money in building a business, you would have benefitted, in this example, from a net income of $30,000 rather than a personal disposable income of only $11,655, since businesses face tax deductions that wage earner do not. So as a business owner you end up ahead of an employee.
In the end, debt proves to be a terrible deterrent to entrepreneurship and risk-taking, despite the promise of riches that a college degree might have lured you to believe would be within you reach if you borrowed for it.
But if you cannot get a job to pay your loan back, and you can neither get out of debt nor escape it through loan forgiveness, then you need to look at entrepreneurship in a different light, because this may be the only way that you could achieve deliverance from the life of serfdom that even an average student loan debt burden will force you to serve out.
The infographic also lists the most expensive colleges based on total cost (tuition + room and board) for the 2008-2009 school year. Here are the 25 most expensive colleges in 2008-2009:
1. Sarah Lawrence College | $53,166
2. George Washington University | $50,312
3. New York University | $50,182
4. Georgetown University | $49,689
5. Connecticut College | $49,385
6. Bates College | $49,350
7. Johns Hopkins University | $49,278
8. Skidmore College | $49,266
9. Scripps College | $49,236
10. Middlebury College | $49,210
11. Carnegie Mellon University | $49,200
12. Boston College | $49,020
13. Wesleyan University | $49,000
14. Colgate University | $48,900
15. Claremont McKenna College | $48,755
16. Vassar College | $48,675
17. Haverford College | $48,625
18. University of Chicago | $48,588
19. Union College (NY) | $48,552
20. Colby College | $48,520
21. Mount Holyoke College | $48,500
22. Tufts University | $48,470
23. Bard College at Simon’s Rock | $48,460
24. Franklin & Marshall College | $48,450
25. Bard College | $48,438